Gold prices in India continued their record-breaking rally this week with rates piercing through the ₹51,000 barrier. On MCX, August gold futures settled 0.6% higher on Friday at ₹51,010 per 10 gram after hitting a new high of ₹51,184 earlier in the session, tracking a rally in global markets. Silver futures on MCX edged higher to finish at ₹61,221 a kg. On a weekly basis, gold rose about 4% while silver surged about 15%.
In global markets, gold crossed the $1,900 per ounce ceiling on Friday for the first time since 2011. A worsening US-China row has added to concerns about global economy that is already grappling with a resurgence in coronavirus cases in many countries.
In yet another escalation in US-China relations, Beijing ordered Washington to close its consulate in the city of Chengdu after US asked China to close its Houston consulate.
Also boosting gold’s safe-haven appeal is a continuous surge in COVID-19 cases across the world that has infected over 1.57 crore people and claimed 6.3 lakh lives.
A weak dollar has also help support the gold’s rally. A weaker dollar usually spurs buying of dollar-priced commodities because they become cheaper for holders of other currencies.
“Gold prices have been driven higher by an escalation in US-China tensions. Investors are also looking for a hedge against possible inflation as hopes for more stimulus measures grow. Key focus would be Fed monetary policy meet next week,” said Jigar Trivedi, research analyst at Anand Rathi Shares & Stock Brokers.
In India, gold prices have surged over 30% so far this year. Analysts say that silver has surged on hopes of a rebound in industrial activity and some investors perceiving silver as being undervalued compared to gold.
Indicative of the safe-haven demand for gold, global holdings of gold-backed exchange fund or gold ETFs have hit record highs. (With Agency Inputs)