Gold prices in India traded higher on the Multi Commodity Exchange (MCX) Tuesday following gains in international spot prices on expectations of a dovish stance from the US Federal Reserve and a weak dollar, analysts said.

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The yellow metal touched a lifetime high at Rs 52,435 levels and in the international market, it touched the high of $1981.10 per ounce levels. Silver also touched the 8 years high of Rs 67,560 levels.

At 10:50 am, gold futures for August delivery rose 0.07 percent to Rs 52,140 per 10 grams as against the previous close of Rs 52,101 and opening price of Rs 52,186 on the MCX. Silver futures traded 1.56 percent higher at Rs 66,550 per kg. The prices opened at Rs 66,047 as compared to the previous close of Rs 65,528 per kg.

US-China trade tension, surplus liquidity in the market and rising investment demand continue to support the yellow metal prices.

“Gold prices rallied on escalating US and China tensions amid expectations of a dovish stance from the US Federal Reserve. The yellow metal is expected to trade with a positive bias till the FOMC decision and after that, we may see profit booking,” said Amit Sajeja, AVP Research - Commodities & Currencies at Motilal Oswal.

Sajeja expects gold may find resistance at Rs 52,600 level while support at Rs 51,800 on the MCX.

International gold prices hurtled to record peaks on Tuesday before the sheer scale of its gains drew a burst of profit-taking, which lifted the dollar from two-year lows and curbed early equity gains. The precious metal had stormed almost $40 higher at one point to reach $1,980 an ounce, only for a wave of selling to slap it back to $1,947 in wild trade, a Reuters report said.

Gold is still up over $130 in little more than a week as investors wager the Federal Reserve will reaffirm its super-easy policies at a policy meeting this week, and perhaps signal tolerance for higher inflation in the long run.

“Geopolitical tension between US and China and weakness in dollar supports the bullion. The dollar is weakening against all major currencies at 93.60 levels. US Bonds yields is also low which supports the safe-haven demand for bullion,” said Anuj Gupta, DVP- Commodities and Currencies Research, Angel Broking Ltd.

“We expect this rally in bullion will continue and gold and silver will move further upside. Gold may test Rs 53,000 levels and silver Rs 70,000 levels soon. In the international market, gold may test $2,000 and Silver may test $30 soon,” Gupta said.

Meanwhile, weak Indian rupee amid buying in domestic equity markets supported gold prices.

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First Published:Jul 28, 2020 11:03 AM IST