Gold Prices Subdued On Hopes Of Economic Recovery Measures

Gold prices rose marginally on Tuesday as investors hope for global policymakers to announce measures to curb economic downfall. There are also growing expectations of easing monetary policies from major central banks around the world, to push growth.

On MCX, gold futures (April 2020) were trading higher by 0.25 percent at Rs 42,090 per 10 grams while silver futures remain unchanged at Rs 44,561/kg.

In the international market, spot gold rose 0.5 percent to $1,597 an ounce but remained below the $1,600-mark, that was breached last week.

A BBC report said that finance ministers of G7 (Group of Seven) countries will hold a conference call on Tuesday to discuss the economic impact of the coronavirus outbreak. The report also said that it is likely that central banks will be involved in the call and these nations may make a joint statement acknowledging the potential impact of the virus spread and agreeing to work together.

While the expectations of announcing reliefs by the G& countries have made riskier assets like equity attractive and instilled faith in the recovery of the world economy, potential rate cuts have supported gold.

April Fed funds rate futures have implied a 0.50 percentage point cut by the US Federal Reserve. The European Central Bank has also signalled its readiness to deal with the economic effects of the outbreak.

A fall in interest rates reduces the opportunity cost of holding non-yielding bullion, and also weakens the US dollar, making the precious metal cheaper for Indian buyers.