Gold, silver decline as strong dollar, easing US-China tensions temper safe-haven demand

New Delhi: Gold and silver prices declined in domestic futures trade on Tuesday as a firm dollar and easing trade tensions between the US and China dampened the precious metal's safe-haven appeal.

On the Multi Commodity Exchange (MCX), gold futures for December delivery decreased by Rs 836, or 0.69 per cent, to Rs 1,20,573 per 10 grams in a business turnover of 13,332 lots.

Similarly, silver futures also incurred losses on the MCX. The white metal for December delivery plunged by Rs 1,558, or 1.05 per cent, to Rs 1,46,200 per kilogram in 20,939 lots.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.08 per cent to 99.95.

Globally, Comex gold futures traded lower due to a firm dollar and diminishing prospects of a further rate cut by the US Federal Reserve next month. The yellow metal for December delivery slipped by USD 19.19, or 0.48 per cent, to USD 3,994.81 per ounce.

Comex silver futures for December delivery was trading 0.62 per cent lower at USD 47.75 an ounce, extending its losses for the third straight day, in the overseas trade.

"Gold hovered around the USD 4,000 per ounce as the dollar remained resilient at over three-month highs, while reduced chances of another interest rate cut in December by the Federal Reserve (Fed), and easing US-China trade tensions blunted bullion's demand," Manav Modi, Analyst – Precious Metal -Research, Motilal Oswal Financial Services Ltd, said.

Meanwhile, Fed policymakers on Monday expressed competing views on the health of the US economy, a debate set to intensify ahead of the central bank's December meeting. The absence of key macroeconomic data, including from the Bureau of Labor Statistics, due to the ongoing federal government shutdown, has further clouded market expectations, Modi added.

Jigar Trivedi, Senior Research Analyst at Reliance Securities said, "Investors are awaiting US private payroll data due this week for more clues on the Fed’s interest rate path. At the same time, safe-haven demand for gold eased after the US and China reached an agreement last week to extend the tariff truce, ease export restrictions, and lower trade barriers."

Analysts said that in the near term, bullion prices are likely to remain under pressure as traders weighed the implications of a strong dollar, softening geopolitical risks and mixed cues from the American economy ahead of the crucial data release.