AU yeah! Gold surges more than 2% hitting 7-year highs

Andrew Cummings
February 27, 2020

The local bullion market continued its bullish trend as on Saturday the price of gold increased Rs650/tola to hit a record high of Rs94,300/tola. "Gold weakened amid some stability in equity markets on hopes of a treatment for the coronavirus as well as on expectations that central banks and governments may take measures to support their economies". The virus to date has been mainly focused within mainland China, and multinational businesses in the worldwide manufacturing, retail and tourism industries have been concerned about its spread for quite sometime, as quarantine restrictions have a direct impact on factory slowdowns and travel in China, having the potential to decimate first-quarter earnings reports.

The price of gold has been rising steadily in the domestic market since July, 2019, with occasional drops. In this fashion, the financial disaster attributable to the outbreak of Corona virus has made gold as a protected haven for buyers. Silver, too, was up at $18.8/ounce. Until Friday, Brent crude had been in the longest run of gains in more than a year thanks to Chinese fiscal stimulus and new threats to supplies from Africa and Latin America.

Among the main industrial metals, copper lost 1.33 percent to $5,688.50 a tonne. Agricultural commodities weren't spared, with US wheat leading losses.

The World Health Organization chief on Monday warned countries to prepare for a potential pandemic of new coronavirus, calling the sudden increase in cases in Iran, Italy and South Korea "deeply concerning".

In response, the United States dollar fell for a second straight session on Monday against the yen to be last at 111.48. The number of people infected and killed by this virus has increased here.

South Korea put the country on high alert while the number of infections jumped to over 700 and deaths rose to seven. Gold dealers say that the increasing price has affected their business in this fiscal year.

The gold/silver ratio, which is the amount of silver required to buy one ounce of gold, now stands at 89.09 to 1.

Gold prices vary in different parts of India - the second largest consumer of the precious metal - due to factors such as excise duty, state taxes and making charges.

Nonetheless, the losses in the commodity remain capped as there is a heightened spread of the deadly virus beyond China.

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