Gold gained almost 2% on Monday as the threat of a war between Russia and Ukraine prompted investors to flee to haven assets. However, Putin denied on Tuesday that Russian troops seized Ukraine's Crimea region, and added his country had no interest in provoking separatist sentiment in Crimea, in a development that not just eased fears of an armed conflict in the region but also prevented a political and financial face-off between Russia and the West. The US and the EU had warned Russia of sanctions if it didnt desist from aggression in Ukraine.
Spot gold dropped to as low as $1,336.54 an ounce earlier in the session and recovered to $1,339.70 by 1036 GMT, still down 0.8%. The metal still remains up almost 1%this week, having scaled its peak since October 30 on Monday at $1,354.80 an ounce. US April gold futures, too, lost $10.50 an ounce at $1,339.80 by 1036 GMT on Tuesday. In Delhi, gold prices fell by R60 to R31,240 per 10 grams on Tuesday responding to the global trend.
Among other precious metals, silver lost 0.5% to $21.28 an ounce while spot platinum dropped 0.5% at $1,447.99 an ounce and spot palladium eased 0.2% at $744.60 an ounce.
Russia is the world's largest energy producer and Ukraine hosts a network of Soviet-era pipelines that carry more than half of Russias gas exports to the EU. So, any conflict between the two countries threatens oil and gas supplies and puts Europe's energy security at risk. Russia and Ukraine together account for roughly 40% of global grain exports, mainly wheat.
Brent crude futures for April delivery fell $1.47 to $109.73 a barrel by 0900 GMT after edging up to its loftiest since December 27 on Monday. US crude pulled back from five-and-a-half month high of $105.22 on Monday and was trading down $1.11 at $103.81 per barrel.
Among farm commodities, wheat for May delivery on the Chicago Board of Trade lost 1.3% at $6.23-1/2 per bushel at 6.36 am. The grain had jumped 4.9% on Monday in its largest single-day rally since June 2012 and hit a high of $6.44-1/2 - its maximum since December 12. Corn, too, dropped 0.7% to $4.67-3/4 per bushel.
Commerce ministry for relaxing gold curbs Commerce minister Anand Sharma on Tuesday favoured relaxing various curbs on gold imports as over-regulation is not just hurting exports but driving up smuggling.
I have been of the consistent view that we have to have a balance. Over-regulation leads to another problem...and that is smuggling. Therefore, some easing is essential, he said.
To control a runaway CAD, the government raised the import duty on the precious metal three times last year to 10% from 4% and the RBI mandated that at least one-fifth of the imported gold be kept aside for re-exports.
Sharma said he has already taken up the issue with the finance ministry and the RBI, and the commerce secretary and the director general of foreign trade will take it forward.