Srinagar: As economic uncertainty continues in the wake of the rising number of coronavirus cases, gold futures on the Multi-Commodity Exchange (MCX) on Wednesday touched a new high and neared the Rs 50,020 per 10 gram mark.
On MCX, August gold futures rose 1% to a new high of Rs 50020 per 10 gram. This is the first time gold prices in India have touched Rs 50,000 for the first time in futures market. September silver futures on MCX jumped 6.6% to Rs 61,130 per kg.
The steady demand for the yellow metal continues as other assets classes including equities and properties are not doing well amid the economic slowdown.
Further, the highly unpredictable economic situation makes investors move towards the safe haven asset.
A recent report by the World Gold Council (WGC) said that with investors looking at safer assets amid the Covid-19 pandemic, investment in gold is likely to make up for the fall in consumption demand for the precious metal.
In global markets, spot gold prices rose 1.3% to $1,865.81 an ounce, the highest in almost nine years. A softer US dollar, surging coronavirus cases across the world and expectation of more stimulus measures lifted prices of precious metals, including gold and silver. Spot silver prices climbed as much as 7.2% to $22.8366 an ounce, the highest since 2013.
Silver has surged on expectations of a rebound in industrial activity as hopes of vaccines rise.
The report titled ‘Gold Mid-Year Outlook 2020’ noted that in the current global economic environment, three factors are supportive of investment demand for gold — high risk and uncertainty, low opportunity cost and positive price momentum.
“Additionally, we expect investors to turn to gold as a means of hedging as we have seen in the first half of this year,” it said.
Like the money market and high-quality bond funds, gold benefited from investors’ need to reduce risk, with the recognition of gold as a hedge further underscored by the record inflows seen in gold-backed ETFs, according to the WGC report.