To prevent coronavirus
from spreading, several countries, including India, have announced lockdown, bringing business activities to a grinding halt and triggering global recessionary waves. Hence, investors have found gold as the only option to park their funds for future earnings.
“The US, the world’s largest economy, has been the worst hard by the Covid-19 pandemic. With no respite in sight in the near future, monetary easing — coupled with safe-haven buying, along with high returns offered during this difficult time -- has made gold a preferred choice for investors,” said Gnanasekar Thiagarajan, director, Commtrendz.
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Gold is currently trading around $1,703 an ounce in the international futures market. At the London spot market, the metal was trading at $1,654.74 an ounce. It the international market had set the record of $1,950 an oz in 2011.
In India, gold has offered nearly 20 per cent returns in less than a month. With all other asset classes, including equity, bonds, and real estate, posting negative returns, especially since the Covid-19 outbreak in late December and January in China, gold has proved the only asset to have yielded positive returns.
“Strengthening rupee against the dollar has limited the jump in gold and silver
prices in India,” said Naveen Mathur, director, Anand Rathi Shares and Stockbrokers. The Indian currency has strengthened 49 paise to close at 75.64 against the US dollar on Tuesday. Meanwhile, Thiagarajan forecasts the price of gold to rise to $1,750 an oz and further to $1780 an oz in the international market, translating into Rs 47,000-47,500 per 10g in India.
Analysts are also staring at the Opec meeting scheduled on Thursday for the crude oil output cut. The proposed 1.5 million barrel per day of production cut would nullify part of its decline in its global demand, and hence, would not make much difference in either crude oil price or global economy. International Brent oil futures were trading at $33.9, which was around $28 per barrel two days ago. On the MCX Crude oil was trading at Rs 2,064, up 0.8 per cent.
With almost all the leading commodities trading upwards, the MCX iComdex shot up 2.66 per cent to 8776.98 points in the late afternoon trade on Tuesday. Waning demand, however, has pulled down 1-carat diamond May futures on the Indian Commodity Exchange by 0.9 per cent to Rs 3,800.5 per carat.