Gold prices fell in Indian markets today as equity markets rallied across the world amid covid vaccine optimism. On MCX, February gold futures fell 0.6% to 49815 per 10 gram while silver tumbled 1.2% to 64,404 per kg. Weighing on the gold price is progress on vaccine front and weaker investor interest, say analysts. In the previous session, gold had ended 0.2% higher while silver had dipped 0.6%.


In international markets, gold prices eased today as encouraging vaccine developments pushed investors towards riskier equities. But hopes of more US stimulus kept gold supported at lower levels. Spot gold fell 0.3% to $1,865.46 per ounce.

Among other precious metals, silver slipped 0.7% to $24.38 an ounce, while platinum rose 0.6% to $1,028.17 and palladium was up 0.1% to $2,311.87.

US Treasury Secretary Steven Mnuchin on Tuesday said he had presented Democrat House Speaker Nancy Pelosi with a new economic rescue package. The $916 billion plan is bigger than the $908 billion proposal put forward last week by a bipartisan group of lawmakers. Gold, considered a hedge against inflation and currency debasement, has risen more than 25% this year in Indian markets, benefiting from near-zero interest rates and the risk of higher inflation likely to result from massive stimulus globally.

Gold traders will be eyeing progress in post-Brexit trade deal talks. British Prime Minister Boris Johnson is due to hold crunch talks with EU chief Ursula von der Leyen.

The rollout of covid vaccines in Britain and prospect of imminent authorisation in the US has added to the optimism for risk assets. Britain became the first country to start administering the Pfizer covid vaccine to its population, kicking off the Covid immunization campaign.

"While gold has recovered substantially, it has failed to revive investor interest.  Gold has rallied sharply in last few days and while a break above $1850/oz has opened path for extended gains we recommend caution as vaccine progress and continuing ETF outflows could pressurize price," Kotak Securities said in a note.

While vaccine developments have curbed demand for havens, bullion is still heading for the biggest annual gain in a decade amid the unprecedented amounts of stimulus used to cushion economies from the pandemic’s impact. Global central banks are embarking on fresh waves of bond-buying, with the European Central Bank expected to increase its own purchase plans when it meets tomorrow.