Gold prices which had dipped on Monday to their lowest level in nearly two months, closing the day around the US$ 1,220 per ounce level, recovered marginally on Tuesday as investors reacted to news that North Korea had successfully completed testing a new ICBM with a longer range than it was hitherto known to have.

Prices in the Asian markets during the day moved marginally upwards, recovering from the 1.9% drop on Monday, which was its largest single day fall in percentage terms since the end of 2016. However, they were still well below the levels touched in recent weeks despite the cautious upward move.

The prices of the yellow metal have been steadily declining over the past few weeks, after a strong start to 2017. Thus, though they dropped by 1.1% last week, the fourth consecutive weekly drop, and by 2.6% during June, they still ended the first six months of the year up nearly 8%.

Monday’s sharp fall was on account of the strengthening of the dollar and the US equity markets on some positive economic data, particularly manufacturing data, from that country.

Meanwhile in India, the market was slowly absorbing the possible impact of the new GST on gold. While the 3% rate for gold is lower than was initially feared, it is still higher than the levies that existed earlier in most parts of the country. The market was thus subdued early in the week, with jewellery trade remaining dull. Some analysts have expressed fears that the higher tax rates may end up encouraging smuggling and illegal trade in the yellow metal.