Gold price scales record-high; silver above Rs 65K mark

Andrew Cummings
August 5, 2020

At 3:59 pm, the MCX gold futures traded with a gain of Rs 157 - or 0.29 per cent - at Rs 53,840.

Anuj Gupta, DVP, Commodities and Currencies Research, Angel Broking, said that it is more of an impact of the worldwide trend which has been witnessed on the Indian futures market on Monday.

The health crisis has prompted unprecedented amounts of stimulus being unleashed to shore up economies including lower rates, which are a boon for non-interest-yielding gold.

U.S. gold futures rose 1.4% to hit an all-time high of $2,014.20 while spot gold rose to a record $1994.86 per ounce.

The record high gold price has also been driven by concerns over tensions between Washington and Beijing.

"Over the past two weeks we've had such a climb in gold, it's going up so fast that you're going to see people wanting to digest or take some profits", Michael Matousek, head trader at U.S. Global Investors, told Reuters, adding that a rising dollar was also weighing on prices.

Gold held steady near record highs on Tuesday as worries over global economic fallout from mounting Covid-19 cases offset an uptick in risk sentiment driven by positive U.S. economic data.

Spot gold jumped as much as 2 per cent to US$2,017.39 an ounce by 4pm EDT (2000 GMT). The haven's allure as a store of wealth is strengthening as investors face the prospect of a long global recovery, and the debasement of fiat currencies, with banks including Goldman Sachs Group Inc. forecasting a rally to $2,300.

'With more downside expected in USA real interest rates, we are once again reiterating our long gold recommendation from March'.

Gold prices have risen more than 30 percent this year as the coronavirus outbreak has weakened the economy and clouded the global financial outlook.

The October contract is now trading at Rs 53,637, higher by Rs 192 or 0.36 per cent from its previous close.

Some investors see the fallout from the Covid-19 crisis, along with ongoing tensions between the United States and China, continuing to push up the price of gold.

In Washington, Trump administration negotiators have said that they will work "around the clock" with Democrats as they attempt to strike a deal on more economic relief measures by the end of the week.

The dollar index today fell 0.3% against its rivals, making gold less expensive for holders of other currencies.

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