Gold prices on Thursday surpassed the Rs 38,000 mark for the first time on the back of rise in domestic demand coupled with strong trend overseas prompting investors to rush towards the precious metal.
After topping the Rs 37,920 per 10-gram mark on Wednesday, gold prices today soared by Rs 550 to hit a fresh high of Rs 38,470 per 10 gram in New Delhi.
Silver also followed suit and rose by Rs 630 to touch Rs 44,300 per kg on increased offtake by industrial units and coin makers.
"The trade war also given support the safe haven demand for dollar, yen and gold in last couple of days," quoted Dilip Parmar, from HDFC Securities. He added later that "safe haven bullions and currencies have witnessed profit-booking, while the US Treasury 30 year bond yield flirts with all-time lows".Taran Patel from HDFC Securities, said: "The US-China trade war escalation, with US imposing new tariffs on Chinese goods and the retaliatory action from China with Yuan devaluation against the dollar, fueled market uncertainty which attracted safe-haven buying in Gold with rise in ETF holdings."
Central banks around the world slashing interest rates amidst fears of a global recession was another factor traders related for hike in gold prices.
"The US Federal Reserve's stance with regards to interest rates is the key factor to determine demand for gold against the dollar", said Patel, adding that the US Fed turned dovish in past FOMC meets but posted the first rate cut in July meeting.
Internationally, Spot gold today rose 0.3% to USD 1,505 per ounce, after breaching USD 1,500 an ounce on Wednesday for the first time in six years.
"The growth of global economic recovery can be supportive factors with major central banks are buying gold to manage foreign exchange reserve," Patel later quoted.
Sovereign gold on Thursday also rose Rs 700 to Rs 28,500 per eight gram.
The Commodity Radar report by HDFC securities suggested buying the dips in gold, with expectations of prices to trade higher over short to medium term.
"Buy the dips with new buying range of $1450-$1420 with overall support at $1380 with targets at $1580. MCX Gold can find new support at Rs. 34500, with Buying range of Rs. 36500-37000 eyeing targets at Rs. 40800."
Edited by Rupa Burman Roy