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

MUMBAI: Indian spot gold prices surged to over ₹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 ₹50,015 per 10 gm before closing at ₹50,005 per 10 gm.

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.

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 EU governments decided to raise an unprecedented €750 billion ($857 billion) to combat disruptions that have resulted from the Covid-19 pandemic. On Wednesday, silver prices closed at ₹59,295 per kg for the first time since December 2012.

“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, vicepresident 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. 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%.