Gold zooms to all-time high on safe-haven purchases amid global volatility

Gold sales in India have come to a standstill as buyers await corrections to place new orders
Gold price on Monday jumped by 0.2 per cent to hit its highest level, as investors bought additional quantity in safe-haven assets, with economic stimulus announced by major economies, amid global volatility .

In Mumbai's Zaveri Bazaar, standard gold soared to trade at a record high of Rs 40,701 per 10 g, against Rs 40,617 per 10 g at close on Friday. Following a similar trajectory, silver prices also jumped to Rs 46,165 a kg from Rs 46,000 a kg on Friday.

Gold sales in India have come to a standstill as buyers await corrections to place new orders. However, sporadic sales, especially as exchange of jewellery and sales related to monthly deposit schemes continued. Buyers who had already booked their ornaments for delivery on Monday also went on to collect their goods.

“The economic stimulus that many governments have started giving in the wake of the Coronavirus epidemic in China is a big plus for gold. An economic stimulus is another way of cutting interest rates. When interest rates start coming down, which is due, holding gold becomes beneficial. For the current price increase, however, the immediate trigger is safe-haven buying,” said Gnanasekar Thiagarajan, director, Comtrendz.

Before settling down, the gold price surged to trade at Rs 40,806 per 10g in physical markets, following an increase in its prices in the benchmark London to $1,586 an oz. However, gold prices slipped marginally to trade at $1580 an oz before falling to $1,578 an oz and recovering to $1584 an oz in the international market.

Siddhartha Khemka, head (Retail Research), Motilal Oswal Financial Services, said: “On the global front, Coronavirus concerns, weak US consumer retail sales data in the US, and weak Gross Domestic Product data from Japan dampened the global sentiment. But China's promise of further policy stimulus to counter its economic hit from a coronavirus outbreak somewhat calmed equity investors.” 

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