Gold prices crashed in India, reflecting a similar trend in global markets. On MCX, April gold futures tanked 4.25% or 1,800 per 10 gram to 40,416 as of Friday’s close. Silver saw a much bigger fall with futures on MCX stumbling 8% or 3,679 per kg to 40,460. This is quite a reversal in price movement for the precious metals. In India, gold had surged closer to a new high of about 45,000 per 10 gram earlier this week. In global markets too prices briefly flirted with $1,700 an ounce on Monday.

Some analysts have attributed the price fall to investors’ rush to raise cash by pulling money out of gold amid a meltdown in global equities this week. A stronger dollar rupee also weighed on domestic gold prices. The rupee after hitting a record low of 74.50 per dollar on Friday pulled back to 73.91. Gold prices in India includes 12.5% import duty and 3% GST.

“Gold prices fell on account of a rout in global equities, which have forced investors to fund margin calls," said Abhishek Bansal, Chairman & Managing Director of Abans Group.

In global markets, spot gold fell 2.9% to close at $1,529.83 an ounce in New York, ending the week with a loss of 8.6%, the most since March 1983.

But despite this week’s selloff, many analysts remain bullish on gold, saying that if coronavirus causes a sharp slowdown in global economy, the previous metal would benefit.

“We expect buying to return to gold on account of a possible slowdown in the larger economies and stimulus measures by central banks and governments to infuse liquidity. Low-interest rates could support gold prices as financing costs will be lower, and the funds will move to the safe-haven assets," said Mr Bansal of Abans Group.

Analysts say that the tumble in gold prices reflect how extreme the selling pressure has been in every corner of the markets. Oil and global equities posted their worst week since October 2008, when woes from the financial crisis were felt, signaling the gravity of the selloff, they say.

Further putting pressure on gold prices, on the physical side, major Asian hubs saw activity dwindle due to the impact of the coronavirus outbreak, especially in the world's biggest gold consumer, China, analysts said.

(With Agency Inputs)

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