Gold prices hit all-time high of ₹50,000/10gm

In international markets, gold prices hit a nine-year high of $1,857.75 per ounce

credit : Livemint

New Delhi : Indian spot gold prices surged to over Rs 50,000 per 10 gram for the first time ever on Wednesday. Prices of spot gold in the Multi Commodity Exchange of India Ltd (MCX) hit an all-time high of Rs 50,015 per 10 gm before closing at Rs 50,005 per 10 gm.

On Wednesday, silver prices closed at Rs 59,295 per kg for the first time since December 2012

In response to the pandemic, central banks around the world have aggressively cut rates and expanded asset purchasing programmes to stabilize and stimulate their economies. On Wednesday, the 27 European Union governments decided to raise an unprecedented €750 billion ($857 billion) to combat disruptions that have resulted from the covid-19 pandemic.

In international markets, gold prices hit a nine-year high of $1,857.75 per ounce at 8pm on Wednesday amid uncertainties because of the spread of covid-19 and the low interest rate environment around the world. During volatile times, investors rush to the precious metal, often considered as a safe haven, as gold helps them diversify risks and improve risk-adjusted returns.

“Gold has rallied to record high levels, reflecting firmness in the international market. International gold prices have been on the rise for the last few months but have picked up pace amid sharp losses in the US dollar, additional stimulus measures, and robust investor inflows. Rising virus cases and US-China tensions have also underpinned gold price," said Ravindra Rao, vice-president and head, commodity research, Kotak Securities.

International silver prices gained because of concurrent gains in gold and industrial metals and strong investor buying, Rao said.

Gold prices will continue to rise because of factors such as lower interest rates, negative rates in few economies, enormous amount of liquidity, and expanded fiscal balance sheets of governments that are trying to push growth amid the pandemic, according to Kishore Narne, associate director and head, commodities and currencies, Motilal Oswal Financial Services. Narne expects gold prices in Indian markets to hit Rs 65,000 per 10 gram over the medium to long term.

Typically, gold is used as a hedge to help mitigate risks associated with equity volatility. In 2020 so far, gold prices in Indian markets have risen 27.97%, while international gold prices have surged 22.16% and the Sensex has fallen 8.2%. Last year, Indian gold prices rose 23.79%, while international gold prices were up 18.31% and the Sensex gained 14.38%.

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