Gold futures trade above Rs 96,000 as global prices recover

Domestic gold futures were trading 0.13 percent higher at Rs 96,290 per 10 gm on MCX in evening trade (17:50 PM) on May 9, as international prices post a decent recovery.

In the international market, the precious metal traded up to 2.50 percent lower in morning deals after US President Trump, earlier in the week, announced a trade agreement with the United Kingdom, boosting optimism over similar deals with other nations.

However, by evening, global gold prices were 0.91 percent higher at $3,334.06 per oz level.

According to experts, the yellow metal was boosted by a weaker dollar and ongoing geopolitical tensions, as attention remained centred on the upcoming US-China trade talks scheduled for this weekend.

On May 8, domestic gold futures ended 0.14 percent higher at Rs 96,307 on MCX as the India-Pakistan conflict intensified.

Geopolitical issues often drive gold prices up, as investors seek safe assets during times of uncertainty. Conflicts, trade tensions, or political instability can reduce confidence in currencies and markets, increasing demand for gold.

"…if the current situation escalates, the rupee could depreciate further, leading to higher gold rates. The precious metal’s rates have been retreating of late, barring the exuberance ahead of the US Fed meet, down from the record high of Rs 1 lakh per ten gram. However, geopolitical tensions could result in an increase in domestic rates," said Navneet Damani, Head of Research, Commodities, Motilal Oswal Financial Services.

On May 8 night, India repulsed multiple drones and missile attacks by Pakistan aimed at border areas and military bases in Jammu, Pathankot and Udhampur.

The yellow metal is likely to be in focus as the conflict widens. Gold rates have retreated this month after hitting a record high of Rs 1 lakh.

In the forex market, the Indian rupee pared its initial losses and settled for the day higher by 17 paise at 85.41 (provisional) against the US dollar on May 9.

Further, amid rising uncertainty, the benchmark S&P BSE Sensex tumbled 880.34 points, or 1.10 percent, to settle at 79,454.47. Similarly, the broader NSE Nifty fell 265.80 points, or 1.10 percent, ending the session at 24,008.