Gold prices in India hit record high on Tuesday as the coronavirus cases in the country surpassed 4,000-mark, making riskier assets such as equities less lucrative due to which investors rushed to safe-haven assets. Gold June futures were up 3.44 per cent or Rs 1,503 to Rs 45,225 per 10 grams at around 9.40 am. It scaled an all-time high of Rs 45,724 at the open. Silver May futures were up 5.72 per cent or Rs 2,358 to Rs 43,581 per kg on MCX, at the time of publishing. “MCX gold June increased Rs 2,002 and made a life time high of 45,724 levels in today’s opening session. We recommend investors to not buy gold on higher rates as physical buying activity is not aggressive. One should always buy on dips, now gold has strong support at 41000 to 42000. One can enter in gold at these support levels,” Anuj Gupta, Deputy VP – Research, Angel Broking Ltd, told Financial Express Online.
Meanwhile, India’s gold imports posted 73 per cent on-year decline in March to their lowest in 6-1/2 years as record domestic prices and a lockdown to curb the spread of coronavirus squeezed retail demand, a government source said on Monday, Reuters reported. Spot gold was down 0.2 per cent at $1,657.67 per ounce. US gold futures rose 1.7 per cent to $1,723.
What’s driving rally in gold prices-
The rally in gold prices on Tuesday is supported by inflows into ETFs. The holdings at the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund rose to 984.26 tonnes on Monday as compared to 964 tonnes on last Monday. “The rally in gold is purely driven by two triggers, one is investment demand and other is trading and speculation. As the jewellery demand has shrunk from India and China, and may not revive this year, therefore in that scenario, investments into the gold especially in an election year (US) will drive prices higher,” Jigar Trivedi, Fundamental Research Analyst-Commodities, Anand Rathi Shares and Stocks Brokers, told Financial Express Online.
Gold prices have jumped over 19 per cent from its recent low of Rs 38,400 per 10 grams hit on March 16, 2020 while silver futures surged 23 per cent from its recent low of Rs 33,580 per kg. Previously, on MCX, gold futures hit a record high of Rs 44,961 per 10 grams on March 6 and silver touched an all-time high level of Rs 49,516 per kg on February 24, 2020. However, the fundamentals have been positive and the recent dip was seen majorly because of the margin pressure and profit booking as there was blood bath in all asset classes, says Navneet Damani, VP-Head Research, Motilal Oswal Financial Services.
He further added saying that as investors and traders preferred to sit on cash, therefore even safe haven like gold was also not spared. “Aggressive easing measures by central banks, continuous inflow in ETFs, volatility in the crude prices, geopolitical tensions are few major factors which continue to lend support to gold prices,” Damani added.