Gold Prices Ease After US Announces Economic Measures

Gold prices in the international markets eased on Tuesday after US President Donald Trump that he would propose "major" economic relief package, including possible payroll tax cut and help for hourly wage workers, to curb the effects of coronavirus outbreak in the country.

Spot gold fell 1 percent to $1,662.75 an ounce after having touched 7-year high of $1,702.56 per ounce the previous day. The metal prices were also weighed down by the slight recovery of the US dollar from its heavy losses against the Japanese yen, the euro, and the Swiss franc.

In India, commodities markets are closed on Tuesday on account of Holi celebrations. On Monday, gold futures on MCX closed 0.44 percent higher at Rs 44,353 per 10 grams.

Markets in Asia slipped further on Tuesday but losses were contained by hopes of coordinated policy measures by governments to limit panic among investors.

Oil recovered from its nearly 3-decade low prices with international benchmark Brent crude futures jumping 6 percent to $36.46 per barrel.

The US Energy Department said that the Trump administration was watching the situation after oil's steep fall.

"These attempts by state actors to manipulate and shock oil markets reinforce the importance of the role of the United States as a reliable energy supplier to partners and allies around the world. The United States, as the world's largest producer of oil and gas, can and will withstand this volatility. The growth of the unconventional oil and gas industry in the United States has led to a more secure, resilient and flexible market," the statement said.

In the previous trading day, a plunge in oil prices set off by Saudi's Arabia's potential price war, caused equity markets across the world to crash amid existing threats of an economic slowdown from coronavirus. BSE's Sensex and NSE's Nifty experienced their worst single-day fall ever.

European and American stock markets also suffered. The S&P 500 index plummeted 7 percent on Monday's opening to trigger a circuit breaker on Wall Street that halted trading in the US market for 15 minutes.

The serious damage in equity markets led to investors rushing to safer assets like gold and bonds.