Representative image for gold.
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New Delhi: Gold and silver futures declined on Thursday as traders reacted to the Federal Reserve's cautious stance on further rate cuts and comments from US President Donald Trump hinting at progress in trade talks with China.
After closing higher in the previous session, gold futures for December delivery decreased by Rs 941, or 0.78 per cent, to Rs 1,19,725 per 10 grams in a business turnover of 12,987 lots on the Multi Commodity Exchange (MCX).
Silver futures also witnessed steep losses, with the December contract depreciating by Rs 1,029, or 0.7 per cent, to Rs 1,45,052 per kilogram in 20,446 lots on the MCX.
In the international markets, Comex gold futures for December delivery slipped below the USD 4,000 per ounce mark, trading at USD 3,971.90 an ounce, down by USD 28.80, or 0.72 per cent.
On Wednesday, the precious metal had snapped a three-day losing streak to close higher at USD 4,000.7 per ounce.
"Gold prices hovered around USD 3,970 per ounce on Thursday, holding onto most of its recent losses and remaining close to a three-week low as traders scaled back bets on further US rate cuts," Jigar Trivedi, Senior Research Analyst at Reliance Securities, said.
He noted that after the Federal Reserve's quarter-point reduction on Wednesday, Fed Chair Jerome Powell downplayed the likelihood of another cut in December, citing divisions among policymakers and the lack of fresh macroeconomic data amid the government shutdown.
"Market participants now assign less than a 70 per cent chance of another rate cut this year, down from near-full expectations before the Federal Open Market Committee decision," Trivedi added.
Despite the near term weakness, gold remained on track for a monthly gain and was up about 50 per cent for the year, he said.
Comex silver futures for December delivery were trading 1.23 per cent lower at USD 47.32 per ounce in the overseas markets.
Meanwhile, on the geopolitical front, President Trump said that the United States (US) could sign a trade deal with China soon after talks with President Xi Jinping in South Korea.
Washington and Beijing are "in agreement on many things", Trump said, adding that the US will, effective immediately, reduce tariffs on all Chinese goods enacted earlier in response to the flow of chemical ingredients for fentanyl into the country.
An expert said, "The development of easing trade tensions between US-China also weighed on the bullion prices".