Gold prices jumps to 7-year high; India sees a surge of 2% in domestic markets

Gold prices climbed to their highest level in seven years on Thursday as an uptick in the number of coronavirus cases in South Korea fueled worries over the wider economic impact of the outbreak. Spot gold rose 0.44 per cent to $1,618.38 per ounce by 1:41 p.m. EST (1841 GMT), after hitting its highest level since February 2013 at $1,623.45. US gold futures settled up 0.5 per cent at $1,620.50 per ounce.

In India too, gold prices jumped 2 per cent in the domestic markets to a new high, following global cues. This led to domestic consumers staying away from fresh purchases, with even scheme- and exchange-related customers deferring transactions to avoid high making charges.

Standard gold in Mumbai’s Zaveri bazaar rose to Rs 42,400 per 10gm in spot trade. While most retail shops in Zaveri bazaar were shut for Mahashivratri on Friday, the ones that were open did not witness any footfall.

Gold prices in India have jumped 8.5 per cent in Calendar Year 2020 so far, and a staggering 26 per cent in the last one year following the rise in global markets. In the benchmark London spot market, gold was trading at $1,639 an oz — the highest in seven years — in early trade, on fears of falling dollar interest rates and monetary easing by China and Japan, which has raised gold’s safe haven appeal.

Interestingly, the rally in US equities took a pause and dollar has become stronger and hit its highest levels in three years against a basket of currencies. The yen slid on economic stimulus, which questioned the Japanese currency as a safe haven. The dollar has risen almost 2 per cent since Tuesday against the yen, reaching its highest in almost 10 months, while it has climbed to a near three-year high against the euro.

While a $250-billion stimulus to deal with coronavirus outbreak has been announced by China to prevent its economy from slowing down, analysts forecast further monetary easing. Japan has already done it recently. Further, with the Brexit date nearing, the UK may proceed with monetary easing.

Elsewhere, palladium was down 0.7 per cent at $2,694.08 an ounce, having touched a record high of $2,841.54 in the previous session on supply deficit concerns. Silver fell 0.3 per cent to $18.34, while platinum slipped 3 per cent to $975.36.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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