NEW DELHI:
Gold prices declined in futures trade on Wednesday in the light of weak global cues ahead of US Fed Chairman Jerome Powell's testimony, while a fall in demand by jewellers at spot market further weighed on the yellow metal.
The better-than-expected US jobs data dashed the hopes of an aggressive rate cut by the US Fed and pushed the dollar index higher which are negative for gold.
Under normal circumstances, gold and dollar share an inverse relationship. Since
international gold is dollar-denominated, a rise in the dollar drags gold prices lower.
"Hawkish comments from Powell may cause a short-term problem for gold. Some profit-taking at higher levels is also the reason behind the fall in gold prices," said
Kunal Shah, Head of Commodities Research at Nirmal Bang.
Moreover, the hike in import duty is negative for gold demand in the country.
"Hike in import duty will dent the demand of gold," Shah added.
In the Union Budget for 2019-20, the government proposed to increase customs duty on gold and other precious metals to 12.5 per cent from the current 10 per cent.
Around 10:55 am, the MCX Gold traded at Rs 34,445 per 10 grams, down by Rs 137.
Silver prices also declined on a fall in orders by industrial units and coin makers.
The MCX Silver traded Rs 38,075 a kilo, down by Rs 105 around the same time.