Gold prices in India hit a record high in futures markets on Monday even though physical buying remained suspended in domestic markets due to the 21-day Covid-19 lockdown amid higher global rates.
At 9:05am, gold futures for June delivery rose 0.85% to Rs 45,680 per 10 grams as against the previous close of Rs 45,294 and opening price of Rs 45,800 on the Multi Commodity Exchange (MCX). It was at Rs 45,950.00 and had gained 1.45% at 11:26am.
Prices of gold in India include 12.5% import duty and 3% Goods and Services Tax (GST). India imports most of its gold requirement.
In the global market, the yellow metal fell as investors booked profits after prices hit a one-month high last week, while worries over a coronavirus-driven steeper global economic downturn and the US Federal Reserve’s stimulus measures limited bullion’s losses.
Spot gold slipped 0.4% to $1,682.65 per ounce by 0522 GMT, having risen to its highest since March 9 on Friday. US gold futures fell 1.1% to $1,732.90.
The Federal Reserve had on Thursday announced a broad, $2.3 trillion stimulus package in a bid to keep the economy afloat amid the outbreak, which had forced 16.8 million Americans to file for unemployment benefits since the week ended March 21.
“The Fed stimulus is a magnet for gold. Not only does it improve the opportunity cost for holding gold but at some stage it will eventually water down the dollar,” Stephen Innes, chief market strategist at financial services firm AxiCorp, said while speaking to Reuters.
European Union finance ministers also agreed on half-a-trillion euros worth of economic support but left open the question of how to finance recovery in the bloc headed for a steep recession.
Commodity currencies slipped against safe-haven units such as the dollar and yen as a record output cut agreed by major oil-producing nations failed to offset broader concerns about global demand for resources, while world shares fell as investors braced for more economic damages from the coronavirus pandemic.
Meanwhile, major physical bullion hubs saw activity dwindle last week due to coronavirus-led restrictions, with strained supply chains cut off from soaring safe-haven demand in some regions.
Reflecting appetite for bullion, holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.6% to 994.19 tonnes on Thursday.
