Gold prices rose by ₹988 to ₹1.42 lakh per 10 grams in futures trade on Tuesday, tracking firm global trends as investors assessed diplomatic efforts to ease the US-Iran conflict.
On the Multi Commodity Exchange, yellow metal contracts for August delivery traded higher by Rs 988, or nearly 1 per cent, to ₹1,42,376 per 10 grams in a business turnover of 551 lots.
"Gold prices witnessed an uptrend in domestic markets on Tuesday driven by cooling of tensions surrounding the US-Iran conflict, which has alleviated some concerns about rising energy costs," said Gaurav Garg, Research Analyst at Lemonn Markets Desk.
In international markets, Comex gold futures for the August contract gained $66.30, or nearly 2 per cent, to $4,082.20 per ounce.
Gold has bounced back in the overseas markets from its key support levels near $3,960 per ounce amid reports that Iran had received a proposal for a 10-day ceasefire from the mediators, Renisha Chainani, Head of Research at Augmont, said.
She said the ongoing US-Iran standoff has kept investors cautious over energy-driven inflation and the possibility of further interest rate hikes by the Federal Reserve.
"Gold remains under short-term pressure from expectations of Fed tightening and a strong dollar. However, investor positioning in gold looks relatively light after months of ETF outflows, meaning further price drops may be limited," Chainani said.
She added that strong physical demand, particularly from China, along with continued central bank purchases, continues to provide support to the precious metal.
According to Manav Modi, Commodities Analyst at Motilal Oswal Financial Services Ltd, market participants will closely watch developments around the US-Iran situation, currency movements and the European Central Bank's policy decision for further cues on the bullion.