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Gold prices today fall after rising about ₹4,000 per 10 gram in 4 days
- Gold prices are up sharply this week amid stimulus measures announced by governments and central banks
- But weak consumer demand and physical market activity due to coronavirus lockdowns may weigh on gold at higher price levels, analysts say
Gold prices in India fell today, tracking a decline in global rates and an appreciation of the rupee against the US dollar. April gold futures on MCX were down 0.8% to ₹43,195 per 10 gram, after they rose 3% or about ₹1,300 per 10 gram in the previous session. June gold futures were today down 0.5% to ₹43,420. Silver prices edged lower too with futures on MCX down 0.08% to ₹41,290 per kg. In past four days, gold April futures are up ₹3,700 per 10 gram, tracking a global rally.
Trading hours in commodity derivatives trading in India will be cut down from March 30 till April 14, exchanges said. The trading will begin at 9 am and close at 5 pm and the new timings will be effective from March 30 till April 14.
In global markets, gold prices edged lower today on profit-taking rates hit a two-week high in the previous session. Spot gold slipped 0.5% to $1,621.07 per ounce. So far this week, gold is up over 8% this week, heading for its biggest weekly gain in over a decade. The Federal Reserve's unprecedented economic stimulus measures and the passage of $2 trillion economic rescue bill have lifted equities and gold this week.
The speed of the rebound in global equities has caught some off guard. After falling into a bear market at the fastest rate ever, the S&P 500 just recorded its quickest three-day advance in nine decades. In India, benchmark index Sensex had rallied 4,000 points in past three sessions, recording its best 3-day gain in years
Among other precious metals, platinum today slipped 0.5% to $732.21, while silver eased 0.2% to $14.35.
Leaders of the Group of 20 major economies on Thursday pledged to inject over $5 trillion into the global economy to combat the impact of coronavirus and "do whatever it takes to overcome the pandemic."
Investment demand of gold has also shown an uptick. The holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund (ETF), rose 0.46% to 953.54 tonnes on Thursday.
The total number of coronavirus cases across the world has exceeded 5 lakh with US overtaking China for the most coronavirus cases worldwide, as infections in New York surged.
Concerns about consumer demand and physical market activity due to coronavirus lockdowns has caused some correction in price, Kotak Securities said in a note.
"But supporting gold price is continuing monetary and fiscal measures taken by US and other countries to minimize the economic fallout from the virus outbreak. Also supporting price are supply concerns as mine operations are being hit by virus related restrictions," the brokerage added.
"Gold has behaved more as a commodity lately moving in sync with other commodities and equity market hence we could see choppy trade as market players assess stimulus measures against increasing risks from virus. We however expect to see buying interest at lower levels as weakening outlook for US economy and stimulus measures may keep pressure on US dollar," Kotak Securities said.
The global gold market was thrown into turmoil this week as logistical disruptions caused by the coronavirus pandemic led to a divergence of prices in New York and London and curbed supply. But since then the historic squeeze in the gold market showed signs of easing after some short sellers appeared to exit and investors rolled forward contracts, Bloomberg reported.
Banks and traders typically ship gold around the world on commercial flights, linking the trading hubs of London and New York with vaults and refineries in Switzerland, Hong Kong and Singapore. But as the virus grounds flights and refineries shut down, it’s becoming harder to trade between global markets. (With Agency Inputs)
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First Published:27 Mar 2020, 09:32 AM IST
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