Gold prices hit Rs 44,700 in the domestic commodity market continued their upward momentum, tracking gains in global markets on Friday as spread of the coronavirus and its economic impact gripped investors.
Tracking yesterday's rally, Gold Futures on MCX rose Rs 210 points or 0.47% to Rs 44,668 per 10 gm. Earlier, the precious metal made a high of 44,700 per 10 gm, rising Rs 242 against the opening of 44,458 today.
Yesterday, gold prices rose rallied Rs 889 higher by the closing bell against the opening of 43,569. From the opening of 42,385 on last Friday, gold on MCX futures has risen by Rs 2,315 till today's high of Rs 44,700.
In the retail market, gold price for 24 karats in Delhi, gained ground on geopolitical tensions and spiked to a record Rs 44,300 per 10 gm.
Amid tumbling global equities, spot gold climbed 0.73% to $1,678.66 per ounce, after a 0.5% gain on Friday. US gold futures advanced 0.80% to $1,681.
Gold, a safe haven bet, climbed to over one-week high and is heading for its best weekly gains as worries over the spread of coronavirus globally made investors rush to safe-haven assets. Gold is likely to stay firm amid concerns over global economic growth due to an outbreak of coronavirus and an unsolved US-China trade dispute, suggest experts.
Spot gold has risen 6% in one month, 11.7% in 3 months, 6.1% in 6 months. It was up 5% in January 2020, due to concerns over global slowdown. Similarly, gold prices on MCX have risen 10.6% half-yearly, 13.1% in the last 3 months, and 6.6% in the last one month.
Global economic sentiments worsened on Friday as disruptions to global business from the coronavirus beyond China worsened, stoking fears of a prolonged world economic slowdown.
The virus outbreak, which was expected to be a one-quarter affair for China's economy has now reached almost 86 countries, infecting more than 98,000 people, disrupting supply chains and affecting global growth output in real terms. The outbreak has taken over 3,300 fatalities worldwide.
Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote said, "Gold, the safest class of asset, is on the journey of making new highs. This possibly imparts that global investors have taken a backseat to try hands in such a volatile market."
Gold prices also rose on the back of weaker rupee, that plunged 65 paise to 74 per American currency in opening trade on Friday amid continued forex outflows following weak global growth concerns. The currency weakness will further lift the landed cost of the precious commodity in India. The rupee had closed with gains of 6 paise at 73.33 against the dollar on Thursday.
Karan Shah, commodity and currency analyst, Indiabulls Securities had suggested earlier that rupee has depreciated drastically since the spread of Covid-19 and may soon test Rs 74.50 per dollar in the near term. Currencies on a global level are continuing their negative streak amid the coronavirus impact in the global supply chain.
A new wave of fear about the spread of the coronavirus and its economic impact gripped investors just one day after Delhi election results powered a rally.
Hareesh V, Head of Commodity, at Geojit Financial Services said, "The global outbreak of coronavirus may continue to worsen the global economic sentiments and it lifted gold's haven demand. A sharp correction in the US dollar also offered lower-level support to prices."
Speaking on yellow metal's technical outlook, he further added," While prices stay above $1,660, expect rallies to continue towards the psychological resistance of $1700 initially followed by $1,742 levels. However, a direct drop below $1,620 would negate the view and take prices lower."
Haresh further added," On the domestic side, a weak INR will offer additional support to the yellow metal. If conditions are favourable, Rs 50,000 per ten gram can also be achievable in the near future."