Gold prices edged fell sharply today, a day after hitting record highs above 38,000 per 10 grams. On MCX, October gold futures fell 1% to 37,843 per 10 grams, tracking lower global rates. On Wednesday, gold futures had hit record high of 38,488. Silver prices, which have also risen sharply this year, slumped, with September contracts on MCX falling 1.3% to 43,192. Record high gold prices have have crimped demand in domestic markets, according to jewellers, who have also reported a surge in supply of scrap gold as customers sell old gold.

In global markets, spot gold was today trading near $1,500 per ounce after hitting a six-year high of $1,510 on Wednesday. The rapid decline in bond yields across the globe has helped lift gold above $1,500 for the first time since 2013. According to a Bloomberg report, the quantum of negative-yielding bonds across the world has jumped to $15 trillion at the start of this week.

Despite gold prices rising over 15% this year, more and more analysts are turning bullish on gold amid dimming global economic outlook, escalating trade tensions between the US and China and Middle East tensions. Goldman Sachs analysts that gold prices, which are already at 6-year high, will climb to $1,600 an ounce over the next six months as investors seek havens.

"All is not well with global equities as an asset class but gold can be a defensive play given that a reversal in interest rate cycle has begun," said Jimeet Modi, founder & CEO, of Samco Securities, said in a note last week, referring to the recent rate cut by US Federal Reserve.

Globally, holdings in gold ETFs, according to a Bloomberg report, climbed to the highest since April 2013, as investors rush to protect their wealth amid turmoil in equity and currency markets. Last week, Bank of America Merrill Lynch analyst Michael Widmer said the metal could climb toward $2,000 in the next two years. The metal reached a record $1,921.17 in the spot market in 2011. UBS Group AG and Citigroup Inc. are also bullish on gold, forecasting prices could rise to as high as $1,600. (With Agency Inputs)