Gold Takes a Breather as Profit-booking Trumps Buying on Akshaya Tritiya

Bucking the view, gold prices slipped on Akshaya Tritya day as the precious metal witnessed some profit booking as global cues weighed on sentiments. The June contract of gold futures eased as much as 0.6% on the Multi Commodity Exchange, whereas in international market it fell 0.7% today.

The yellow metal’s prices cooled off despite festival demand in India mainly due to a stronger dollar and signs of easing trade tensions between the US and its key partners. Trump decision of eliminating overlapping tariffs on carmakers and his comments on likely having a deal with India ease some of the concerns of the investors.

Due to the newly announced changes, carmakers that pay a 25% tariff on auto imports are not subject to other levies, according to the orders. However, the rules do not appear to protect automakers from tariffs on steel and aluminum that their suppliers pay and pass on, reported New York Times.

Manav Modi, senior analyst, commodity research at Motilal Oswal had earlier said in a note that while some cool off in gold prices cannot be ruled out after its recent sharp rally, the commodity has both positive and negative triggers at this juncture. Any updates regarding ease off in global uncertainties could put further pressure on bullion, he had added.

Apart from a breather from the US-side, some media reports reported that China has waived the 125% tariff on ethane imports from the US. Also, a 0.1% increase in the dollar index is also weighing on the investors, who are now looking to book partial profit for the time being.

Motilal Oswal has ‘a buy on dips’ stance on gold. Investors can start accumulating near support zone for the long term targets, the brokerage had said in a report.

The market participants now await US macroeconomic data such as personal consumption expenditure, which if comes on a higher-level, the precious metal might see some selling pressures.