On Wednesday, gold price touched at all-time high of Rs 37,920 per 10 grams in New Delhi, which is an increase of Rs 1,113 from the previous close. Earlier, on Monday, gold rates in India spiked to the Rs 36,970 mark. The surge comes after a jump in international price to its highest in 6 years.
Amid escalation in tensions between US and China over trade agreements, Spot Gold on Wednesday rose 1.1 percent to $1,490.57 an ounce, the highest since April 2013. US gold futures climbed 1.2 percent to $1,501.50 an ounce.
Analysts say that as the US-China trade war have started showing no signs of abating, investors moved their money to the precious metal, which is known to be a safe haven asset in times of geo-political tensions. Investors have been withdrawing funds from the markets for a week now, sending global equity indices to new lows in 2019.
The trade dispute between US and China escalated fast in the last few days. Last week, US president Donald Trump threatened to impose additional tariffs on China's exports, which if implemented will mean that all Chinese goods entering the American soil will be subject to some kind of duties.
At the beginning of this week, Chinese yuan breached its politically sensitive level of seven to the US dollar for the first time since 2008 financial crisis.
To this the Trump administration accused China of manipulating its currency as a tactic to make its exports inexpensive, giving them an edge over competitors. The US Treasury on Tuesday, officially released a statement labeling China as a "currency manipulator."
In retaliation, China's Commerce Ministry announced that Chinese companies have stopped buying American agricultural products, hurting US farm exports further.
While ideally such a situation would be dealt with negotiations between the two countries, talks have not proven to have solved their disagreements over trade for more than a year now.
The escalation in their dispute could mean that any interest rate cut by the Federal Reserve. Lower interest rates further boost the appeal of gold.