Gold prices, which were hovering around Rs 40,000 per ten grammes in the beginning of the week, spiked to a record Rs 41,070 on Friday in the Mumbai market, following news on mounting tensions between the US and Iran.
Gold prices had soared above Rs 40,000 last year in the first week of September, following which it hovered around Rs 39,000 until the last week of the year. It increased to Rs 40,120 on December 31. Prices stood at Rs 40,225 on the New Year and Rs 40,330 yesterday. Last year during the first week of January, gold prices traded around Rs 32,800 per 10 grammes.
Political tension between the US and Iran worsened today as the Iranian Quds Force chief Major-General Qassem Soleimani and a top Iraqi commander Abu Mahdi al-Muhandis were killed in a US airstrike at the Baghdad airport. Sources said spot international buyers were buying gold in bulk in the global markets following the news, which was the main reason for gold prices soaring to new heights.
A retail jeweller in Mumbai said since the gold prices have remained high over the past week, many customers were trying to sell gold and purchase new jewellery or bars in the New Year. Prices of sovereign (8gms) has increased from Rs 23,440 last week to Rs 29,440, they said. Brokerage SMC Global has said in an analysis that gold may witness strong upside momentum following the Middle East tensions, as gold is seen as a safe investment during volatile times. Gold prices will move upside towards Rs 40,000 and silver towards Rs 48,000, it said.
India's gold imports in 2019 fell 12 per cent from a year ago, the lowest in three years as global gold prices had jumped 18 per cent in 2019. Gold demand in India, in the first half of 2019, was 372.2 tonnes, 9 per cent higher than the first half of 2018, despite a slowing economic environment. Countries such as China, Russia, Turkey, Kazakhstan, Qatar and India had increased their gold reserves over the last year. It also contributed to high prices for the metal in 2019.