Gold prices spiked on Wednesday as the government imposed a 21-day pan-India lockdown to curb the spread of the deadly coronavirus (COVID-19) pandemic. MCX gold futures strengthened by Rs 721 per 10 grams - or 1.74 per cent - from their previous close to touch Rs 42,100 per 10 grams at the strongest level of the day, before trimming some of those gains. At 11:45 pm, the gold futures contract (delivery on April 3) was up 1.57 per cent (Rs 649 per 10 grams) at Rs 42,028 per 10 grams, compared with the previous close of Rs 41,379 per 10 grams.
Gold jewellery prices vary in different parts of India - the second largest consumer of the precious metal - due to factors such as excise duty, state taxes and making charges.
In the international market, gold prices edged lower in volatile trade on Wednesday as a flight to cash offset growing hopes for a massive US economic stimulus to stem the coronavirus outbreak's economic toll.
Spot gold was last seen trading 0.3 per cent lower at $1,605.45 per ounce, having risen as much as 1.6 per cent earlier, following a jump of more than 3 per cent in the previous session.
Analysts said the lockdown increased gold's appeal as a safe haven. Domestic equity markets swung between gains and losses amid volatile trade, also making gold a more attractive bet. Typically, gold shares an inverse relation with equities.
At 11:51 am, benchmark equity markets benchmarks S&P BSE Sensex and NSE Nifty 50 were up 1.28 per cent at 27,014.98 and 1.19 per cent at 7,894.25 respectively, a day after Prime Minister Narendra Modi ordered a 21-day nation-wide lockdown to contain the rapid spread of the coronavirus.
What Analysts Say On Current Gold Rate
Analysts say gold rates may pick up in the near term due to fears the coronavirus outbreak may hamper world economy.
“COMEX gold trades higher near $1675/oz after rallying close to $1700/oz yesterday. Gold has benefited from correction in US dollar index as Fed's aggressive monetary easing measures pressurized bond yields. ETF inflows and gains across commodities and equities also lent support to gold. However, weaker demand outlook for India kept a check on upside,” said Ravindra Rao, VP-head commodity research at Kotak Securities.
"Gold may continue to trade higher on monetary and fiscal measures taken by US and other governments however price could face some resistance near $1700/oz level,” he added.