In the international market, gold was trading at $1,680/ounce; the $1,700 level appeared imminent. Silver, too, was up at $18.8/ounce.
Nigam Arora, US-based senior analyst and author of Arora Report, said: “The jump in the gold price is because of the coronavirus scare, as a hedge against the fall in stock markets.
Technically, gold has broken out to rise further and this is happening because of various rare things coming together. Instead of falling when the dollar is becoming stronger, gold is rising.”
The coronavirus outbreak is seen hurting global economies worse than expectations. The markets
have already discounted fears of slow growth in China and the global economy in the March 2020 quarter. On the other hand, the costlier gold has pushed customers onto the sidelines. Demand is almost absent. Only some compulsive wedding-related buying or enquiries are being reported. Saurabh Gadgil, managing director, PNG Jewellers, said: “As far as investment is concerned, buyers and investors are playing it safe — they waiting and watching at the moment.”
But how long the gold price could keep rising? Hitesh Jain, vice president (research), YES Securities said: “The gold is approaching $1,700/oz amid concerns over the economic impact of the Chinese epidemic. However, we sense that the markets
will eventually start pricing in the fact that the coronavirus crisis is not a structural issue, but a transient one. It is perplexing to note growing divergence/disconnect in the financial markets, with buoyancy in global equities, bonds and gold. This can’t continue for long. Gold will retreat from the current highs once the adverse effects of coronavirus fade and the global economy stabilises.”