On Wednesday morning, gold futures on MCX (Multi Commodity Exchange of India) were slightly changed at Rs 51,127 per 10 grams. In the international market, spot gold was flat at $1,928.35 per ounce as signs of progress in US-China trade negotiations, a negative for the precious metal's demand, was balanced by worries over the global economic outlook.
On Tuesday, the US and China said that trade negotiators of both the countries spoke over phone to review the progress on phase one of their trade deal. Disclosures on the deal eased concerns that the worsening state of relations between the two countries after the pandemic and Hong Kong security law, would interfere will their agreed-upon truce.
International investors are now awaiting US Federal Reserve's chairman Powell's speech on Thursday that is expected to provide further clarity on the American central bank's view on inflation and monetary policy. After the outbreak of COVID-19, the Fed Reserve had slashed interest rates near zero and rolled out a wave of stimulus measures to help its virus-hit economy, driving gold prices high as investors rushed to the safe-haven asset in times of uncertainties.
In India, the Reserve Bank of India (RBI) in its annual report released on Tuesday said that the contraction in economic activity will likely prolong as states have re-imposed stricter lockdown. It also said high-frequency indicators so far pointed to a "retrenchment in activity that is unprecedented in history", adding, "the upticks that became visible in May and June after the lockdown was eased in several parts of the country, appear to have lost strength in July and August, mainly due to re-imposition or stricter imposition of lockdowns, suggesting that contraction in economic activity will likely prolong into the second quarter".