Gold prices in India traded higher on the Multi Commodity Exchange (MCX) Tuesday following gains in international spot prices on escalating trade tensions between the United States and China. However, gains in the yellow metal were capped on hopes of a potential coronavirus vaccine after a positive development from a Moderna trial, analysts said.

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At 12 pm, gold futures for June delivery gained 0.10 percent to Rs 46,700 per 10 grams as against the previous close of Rs 46,655 and opening price of Rs 46,802 on the MCX. Silver futures traded 0.26 percent lower at Rs 47,575 per kg. The prices opened at Rs 47,799 as compared to the previous close of Rs 47,698 per kg.

Buying in SPDR Gold Trust holdings, the world's largest gold-backed exchange-traded fund, also supported gains.

“Rise in ETF holdings and tense relations between the US and China led gold prices higher. However, the yellow metal may come under pressure in the short term as investor risk appetite increased on positive developments on coronavirus vaccine trials and upbeat equity markets,” said Amit Sajeja, AVP Research - Commodities & Currencies at Motilal Oswal.

Globally, gold prices inched up, supported by strained Sino-U.S. relations and a dismal global economic outlook, although positive news from an early-stage trial for a coronavirus vaccine spurred some risk appetite and capped the metal's gains.

Spot gold was up 0.2 percent at $1,735.04 per ounce. US gold futures gained 0.2 percent to $1,737.10.

On Monday, the metal fell back from a more than seven-year high to settle 0.5 percent lower, as stocks and oil surged after drugmaker Moderna said its experimental vaccine showed promising results in an early-stage trial.

“Gold may witness resistance at Rs 47,300 levels on the MCX. Hence, sell on rally is advised for a target price of Rs 46,500 in the short term. In the global market, $1,710 may act as immediate support,” Sajeja added.

Gold prices have rallied over 14 percent so far this year as the safe-haven appeal for gold has skyrocketed amid uncertainties looming over global economic growth and a series of interest rate cuts by central banks globally and policy stimulus to counter the economic damage.

Meanwhile, Indian rupee extended morning gains and trading near the day's high at 75.66, amid buying seen in the domestic equity market.

First Published:May 19, 2020 11:54 AM IST