Gold price in India today: Yellow metal rises to Rs 31,711 as investors rush to safety on trade war fears

Gold price for 10 gram (24 karat) in  Mumbai today was slightly higher at Rs 31,711,  as the threat of a global trade war pushed shares and the US dollar lower and spurred demand for assets such as bullion that are seen as safer investments. Gold prices rose in the global market after US President Donald Trump`s decision on Thursday to place tariffs on imports of aluminium and steel raised fears of retaliation by other nations and knocked the dollar from a six-week high, making dollar-denominated gold cheaper for users of other currencies. "The risk of trade wars which could impact economic growth and raise uncertainty plays into the hands of gold," Reuters quoted Saxo Bank analyst Ole Hansen, as saying. 

Spot gold was up 0.5 percent at $1,323.30 an ounce at 1527 GMT  US gold futures were 1.5 percent higher at $1,324.40 an ounce. Gold was, however, down 0.4 percent this week and on track for a second consecutive weekly loss. It touched $1,302.61, the lowest since January 2, on Thursday, pushed down by expectations that the US Federal Reserve will raise interest rates more aggressively than previously thought.

Higher interest rates are negative for gold because they raise bond yields, reducing the attractiveness of non-yielding gold, and tend to boost the dollar, according to Reuters.  But the threat of a trade war overpowered fears of interest rate increases, Hansen said. 

"If a trade war becomes a reality it could push inflation up and growth down and that should ease the aggressiveness of the Fed. That`s why it has become the focus (of the gold market)," he said.  Also positive for gold was its ability to hold above its technically important 100-day moving average price at $1,300, also a key psychological level for investors, the report said. 

(With agency inputs)