Gold price has seen another sharp jump globally on Monday, with rates in local spot market heading towards Rs 45,000 per 10 gram and silver eyeing Rs 50,000 per kg. Standard gold closed Rs 1840 or 4.4% higher at Rs 43,415 in Mumbai Zaveri Bazar over Thursday close. This is highest single day rise in official market over previous close. Considering 3 per cent GST, it was quoted above Rs 44717.
With international price trading at $1680 per ounce, $1700 level is imminent. It will not be a surprise to see Rs 45,000 per 10 gram for standard gold (995 purity) soon. Silver has only followed gold with international price at $18.8 per ounce while in Mumbai Zaveri Bazar, it closed 3 per cent higher at Rs 49035 per kg and GST inclusive rice has already crossed Rs 50,000 per kg.
Nigam Arora, US based senior analyst and author of Arora Report said, “The jump in gold price today is due to coronavirus scare as a hedge against stock market falling. Technically gold has broken out to rise further which is occurring on various rare things coming together. Instead of falling when dollar is becoming stronger, gold is rising. Gold has also broken out when stock market aggressively. Now that the coronavirus scare has been subsiding, gold is moving up. Gold breaking out under these circumstances is rare.”
Now virus is seen hurting global economies beyond earlier envisaged. Market has already discounted fears of low growth for China and global economy in the March 2020 quarter.
However, high prices so soon has pushed customers to side-lines. Demand was almost absent. Only some compulsive marriage related buying related inquiries/buying were seen. Saurabh Gadgil, Managing Director, PNG Jewellers said, “As far as investment is concerned, buyers and investors are playing it safe, waiting and watching at the moment.”
How long the gold price keep rising? There is a flip side too. Hitesh Jain, Vice President – Research, YES Securities said, “Gold prices are approaching US$1,700/oz amid concerns over the economic impact of Chinese epidemic. However, we sense that markets will eventually start pricing in the fact that Coronavirus crisis is not a structural issue, but rather a transient one. It is perplexing to note growing divergence/disconnect in financial markets, with buoyancy in global equities, bonds and gold. This can’t continue for long. Gold will retreat lower from the current highs once the adverse effects of Coronavirus fades and global economy stabilizes.”