Gold touches new peak in India tracking global cues

Source: Xinhua| 2020-07-22 22:42:09|Editor: huaxia

MUMBAI, July 22 (Xinhua) -- Precious metal prices surged on Indian bourses tracking global cues with gold surpassing the 50,000 mark in Indian rupees (670 U.S. dollars) for 10 grams for the first time on the commodity bourses on Wednesday.

Globally, spot gold and silver prices rose to nine-year and seven-year peak, respectively due to surging COVID-19 cases, soft U.S. currency and expectations of more stimulus measures by countries worldwide to revive their virus-hit economies, analysts with domestic commodity brokerages said.

Lower interest rates, negative rates in few economies, enormous amount of liquidity and expanded fiscal balance sheets of governments which are trying to push growth amid COVID-19 have driven gold prices over the past four months, said Kishore Narne, associate director at Motilal Oswal Financial Services Ltd., a domestic stock brokerage house.

"We do expect the anemic economic growth would cause further isolation of economies and intensify protectionist policies and further aggravate trade-war which also helped gold in the past. We expect gold to keep up the momentum with occasional corrections," Narne said, who has set a target of 872 U.S. dollars per 10 grams for gold.

Silver prices too surged by 6.7 percent and were trading at 821 U.S. dollars per kg on the Indian commodity exchange on expectations of a rebound in industrial activity as economies were relaxing lock-downs.

"The gold-silver ratio which had traded at the highest levels of 125-126 levels on March 18, has gradually declined in the past few months and is currently trading at 83-84 levels. In the coming months, we expect the above ratio to come down further to 72-74 levels, which would indicate further demand for silver as compared to gold," said a note by Choice Broking, another domestic stock brokerage.

Gold silver ratio is arrived by dividing the spot gold price with the silver price, which when rises indicates relatively higher gold prices and vice-versa, when it falls.

In January, World Gold Council had projected India's gold demand to reach 700-800 tons in calendar year 2020 after having dropped by 9 percent to 690.4 tons in the previous year due to rising prices. Enditem