Bull run continues in the bullion market amid high uncertainty and with the likelihood of new coronavirus cases not declining anytime soon.
Futures of the yellow metal touched a fresh record high on the Multi-Commodity Exchange (MCX) as it reached Rs 48,420 per 10 gram on Wednesday. It had even opened on a fresh high of Rs 48,333.
Currently, the August contract of gold on the MCX is at Rs 48,342.00 per 10 gram, higher 110.00 or 0.23% from the previous close.
Analysts maintain that this attraction of investors towards the yellow metal comes on the back of the resurgence in new cases of novel coronavirus infection across the world, every passing day. This very resurgence has dampened hopes for an early economic recovery.
In a recent blog post, International Monetary Fund's (IMF) Chief Economist Gita Gopinath said that IMF is likely to further revise economic growth forecasts downwards in its upcoming outlook update due to the severe impact of the coronavirus pandemic and the resultant lockdowns across the world.
Gopinath said that although many countries begin to ease containment policies and gradually permit the resumption of economic activity, there remains "profound uncertainty" about the path of the recovery.
This very uncertainty has spooked global investors too and they are also moving towards the metal with the international gold prices touching an eight-years high of $1773 per ounce.
Bachhraj Bamalwa, a Kolkata-based jeweller, was of the view that it is purely safe haven investment amid the uncertain environment. According to him, although the lockdown has been lifted, businesses have not received much demand, which is a cause of concern. Globally, too, several enterprises are mulling shutting down of operations amid the rising COVID cases, he added.
Bamalwa, who is also a former Chairman of the All India Gems and Jewellery Trade Federation, said that most of the buying globally right now is being done by Exchange Trading Funds.
Market analysts are of the view that gold may touch new highs in the coming days as the uncertainty and the pandemic are not seen receding soon enough.