Gold prices in India hit new highs for the second day in a row, tracking firm global rates. On MCX, June gold prices surged 1% to a new high of ₹47961 per 10 gram. Silver futures in India rose nearly 5% to 48,999 per kg, adding to Friday's ₹2,586 gain. Gold prices in India include 12.5% import duty and 3% GST. In India, the government has eased some coronavirus-driven restrictions, allowing shops and markets including barber shops, salons and spas except those in malls to open with staggered timings and some safeguards.
In global markets, gold prices surged to over seven-year highs after US Federal Reserve chief warned that a full recovery of the US economy could drag through 2021 and depends on the delivery of a vaccine. Spot gold today rose about 1% to $1,759.98, the highest since October 2012.
Among other precious metals today, platinum gained 0.7% to $803.19, while silver rose 2% to $16.96.
Gold has surged 16% in global markets this year amid worries of a deeper global recession has prompted vast amounts of stimulus by governments and central banks. Latest data showed U.S. retail sales and factory output registered the steepest declines on record in April amid coronavirus-related shutdowns. Speculations that US interest could go negative has pushed holdings in gold-backed exchange-traded funds or ETFs at a record high.
Gold is seen as a hedge against inflation and currency debasement, while it is also used as a safe-haven during times of economic and political uncertainties.
The holdings of SPDR Gold Trust holdings, the world's largest gold-backed exchange-traded fund, rose 0.8% to 1,113.78 tonnes on Friday.
Tensions between US and China - the world's two largest economies - have spiked in recent weeks with President Donald Trump on Thursday saying that he was very disappointed with China's failure to contain the coronavirus outbreak and that the pandemic had cast a pall over the trade deal with Beijing that he considers a major achievement.
Rising fresh hostilities between US and China, concerns over the next wave of coronavirus breakout and stimulus measures taken by global central banks also ignite gold’s safe haven demand, said Hareesh V, head of commodity research at Geojit Financial Services. Meanwhile, an upbeat dollar and limited physical market activities are likely to cap major gains, he added.
(With Agency Inputs)