Gold price surge continues, touches Rs 51,833/10 gm
New Delhi, July 27: Gold is off to a strong start this week in Indian markets after posting strong gains in the previous week. On MCX, August gold futures rose 1.5% or ₹800 to a record high of ₹51,833 per 10 gram, tracking a global rally. Silver prices also rallied today. Silver futures on MCX gained 5.5% or ₹3,400 to ₹64,617 per kg. In the previous week, gold prices had surged 4% while silver had jumped 15%.
In global markets, gold prices hit a record high today as US-China tensions, a weaker US dollar and expectations of more stimulus pushed investors towards safe-haven assets like gold. Spot gold was up 1.5% to $1,928.40 per ounce, surpassing the previous high of $1,920.30, hit in September 2011.
Top aides to US President Donald Trump said on Sunday they agreed in principle with Senate Republicans on a $1 trillion coronavirus relief package. Last week European Union leaders had agreed on a massive stimulus of over $850 billion. Non-yielding gold typically benefits from low interest regime.
The yellow metal is also helped by aggressive monetary easing adopted by many central banks around the world since the pandemic plunged the global economy into a recession. Some investors worry that such an unprecedented level of money-printing could eventually lead to inflation.
The dollar index today fell 0.5% to a multi-year low against its key rivals, making gold less expensive for holder of other currencies.
Tensions have soared between China and US on a range of fronts including trade, China's handling of the novel coronavirus and a tough new security law for Hong Kong, with US officials warning of a "new tyranny" from China.
Chinese authorities today took possession of the closed US consulate in Chengdu today, after it was ordered to shut last week by Beijing.
Relations between US and China has deteriorated in recent days in a Cold War-style standoff, with Beijing ordering the Chengdu mission to be shut in retaliation for the forced closure of Beijing's consulate in Houston, Texas.
However, supporting gold price is weakness in US dollar index and strong investor inflows in gold-backed ETFs, Kotak Securities said in a recent note.
Gold traders will be watching the stance of Fed policy makers when they meet later this week. Expectations are that they will keep interest rates near zero, while markets will also be watching for any signals around shifts in strategy.