New Delhi: Gold prices in India continue to surge to new highs. In Mumbai, gold surged ₹1,263 to hit an all-time high of ₹38,070 per 10 gram as trade tensions between the US and China boosted the safe-haven appeal of precious metal. Tracking gold, silver jumped ₹650 to ₹43,670 per kg. Gold of 99.9% purity surged ₹1,113 to ₹37,920, while that of 99.5% climbed ₹1,115 to ₹37,750 per 10 gram. Gold also hit new highs in futures market. At the Multi-Commodity Exchange (MCX), the October contract of gold was trading at ₹37,956 per 10 gram before it hit a life time high of ₹38,070.
In global markets, gold futures surged above the important level of $1,500 an ounce on the Comex, rising as much as 1.2% to a six-year high of $1,502.30. Gold prices are up 17% this year on Comex, buoyed by safe-haven demand amid US-China trade war, global growth slowdown and dovish monetary policies by major central banks. Investors have piled into into exchange-traded funds.
Silver, gold’s cheaper cousin, also surged. Spot prices in Singapore rallied as much as 2.2% to $16.8082 an ounce, the highest in more than a year.
The Reserve Bank of India, which today cut repo rate by 35 basis points, in its policy statement said that gold prices have risen sharply since the last week of May, propelled by increased safe haven demand amidst rising downside risks to growth and a worsening geo-political situation.
The US-China standoff on trade - with Trump administration threatening fresh tariffs against Chinese goods, the devaluation of the China's currency yuan and the US branding China as a currency manipulator - has boosted the odds of more easing from the Federal Reserve. Lower interest rates boost the appeal of non-interest yielding assets like gold. Last month, the Fed reduced borrowing costs for the first time in more than a decade, responding in part to the impact of the trade war.
The yuan had fallen sharply on Monday, going past the symbolic 7-per-dollar level, throwing both global equity and currency markets into turmoil.
According to Bloomberg report, world’s stockpile of negative-yielding bonds has surged to a record, with the market value of the Bloomberg Barclays Global Negative Yielding Debt Index closing at $15.01 trillion Monday. The yield on 10-year Treasuries has tumbled. Veteran investors like Mark Mobius and Ray Dalio have turned positive on gold. Gold prices have also gained support from central-bank buying.
Back in India, record high gold prices have dampened the demand for the precious metal. According to a Reuters report, India's gold imports in July plunged 55% from a year ago to the lowest level in three years. Jewellers have also reported a jump in scrap supplies as more people sell their oil ornaments prompted by high prices. Analysts say that scrap supplies are further reducing import requirements. The government last month increased the import duty on gold to 12.5% , from 10%. (With Agency Inputs)