Gold prices surged by Rs 522 to Rs 50,703 per 10 gram to hit a record high in the Mumbai bullion market on weakness in the dollar and rising political tension between the US and China.
The dollar index, which measures the dollar against a basket of six currencies, slipped for the fifth straight day to 94.92.
Ravindra Rao, VP- Head Commodity Research at Kotak Securities, said gold may continue to trade higher unless the dollar, which is trading near the support zone of 93.85, recovers.
The rate of a 10 gram 18, 22, 24-carat gold in Mumbai was Rs 38,027, Rs 46,444 and Rs 50,703, respectively, plus 3 percent GST.
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“Gold prices hit a fresh high on uncertainties brought about by the COVID-19 pandemic. With huge unemployment and slowdown leading to money printing presses going on an overdrive globally, we expect volatility to stay. While consumption demand may take a while to return to normal levels, gold is definitely a good long-term investment vehicle in the current scenario,” said Suvankar Sen, Executive Director, Senco Gold and Diamonds.
The gold-to-silver ratio currently stands at 83.41 to 1, which means the amount of silver required to buy one ounce of gold.
Silver prices rose Rs 1,615 to Rs 60,785 per kg from its closing on July 22. The white metal has gained Rs 9,045, or 17.48 percent, so far this week.
In the futures market, gold touched an intraday high of Rs 50,707 and a low of Rs 50,125 on the Multi-Commodity Exchange (MCX). In the August series, the yellow metal touched a low of Rs 39,200 and a high of Rs 50,707.
Gold futures for August delivery gained Rs 391, or 0.78 percent, at Rs 50,469 per 10 gram in evening trade on a business turnover of 6,236 lots. The same for October delivery edged higher by Rs 467, or 0.93 percent, to Rs 50,704 on a business turnover of 13,474 lots.
The value of the August and October contracts traded so far is Rs 4,205.73 crore and Rs 1,025.08 crore, respectively.
Similarly, Gold Mini contract for August rose Rs 297, or 0.59 percent at Rs 50,375 on a business turnover of 6,198 lots.
“Given the lower interest rates, negative falling bond yields, sustained liquidity push by many central banks and expanded fiscal balance sheets to minimise the impact of COVID-19 related slowdown, we expect gold to deliver 30 percent returns targeting Rs 65,000/10 gm over the next 18-24 months,” said Navneet Damani, Vice President, Motilal Oswal.
At 12:07 (GMT), spot gold was up $3.58 at $1,875.53 an ounce in London trading.
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