Gold heading towards Rs 45,000 per 10 grams level amid volatility in global markets

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Volatility in the global markets has once again brought gold back in focus, with the price of the yellow metal rising sharply worldwide. In India, it is approaching the Rs 45,000-level.

This is a boon for investors holding gold exchange-traded funds and sovereign gold bonds (SGBs). At present, it is perhaps the only instrument to be providing returns based on the money invested.

While the spot gold markets are closed across the country, the Indian Bullion Jewellers Association’s price, which still acts as the indicative price, saw a sharp jump on Wednesday, with a near-3 per cent jump to close at Rs 43,250 per 10 gram (999 purity).

Although the spot market is closed, the rising trend is reflected even in listed SGB prices. SGBs are also accepted as collateral.

There is a huge demand for the dollar among international investors, and traders were buying gold, given that both are considered global currencies. Following the COVID-19 related lockdown, refineries in the UK had to keep their operations shut or running at lower capacities, which sent gold prices surging.

The international gold price is at $1,620 per ounce. Compared to this, domestic prices are at a discount. Globally, refineries have either been shut or are operating thinly. In Peru and Chile, mines — including gold mines — have been closed, following the virus scare. Therefore, doré or partially refined gold was not supplied to refineries, even in Switzerland, where the lock down is not that stiff.

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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