On Monday, gold futures (April 2020) on MCX climbed to a new all-time high of Rs 43,788 per 10 grams, after having surged close to Rs 2,000 per 10 grams in value last week.
Imitating the yellow metal, silver futures were trading 0.7 percent higher at Rs 48,686/kg on Monday.
While the gains are primarily a reflection of the global trend in these metals' prices, here's more to why that has been happening lately.
1. Increase in coronavirus cases outside China
The reasons for the latest surging trend in the precious metals' prices revolve around the coronavirus scare.
As of 23 February, China's National Health Commission reported a tally of 77,150 confirmed cases of infections and 2,592 deaths from coronavirus.
However, there are now worries about the spread of the virus outside China, some unrelated.
On Monday, the Korea Centers for Disease Control and Prevention reported an additional 161 cases, a sudden surge in numbers, which brings the total to 763 in the country and the death toll has increased to seven.
South Korean stock market's benchmark Kospi index closed 3.9 percent lower on Monday.
Another surprising development in the epidemic is the death of at least 4 people in Iran last week, where there were no reported COVID-19 cases before. The death toll has now reached 12 and 61 cases were reported, causing the closure of schools and universities in the country.
The sudden surge of cases outside China has raised fears that it could be transformed into a global pandemic.
"The cases that we see in the rest of the world, although the numbers are small, but not linked to Wuhan or China, it's very worrisome," said Tedros Adhanom Ghebreyesus, director-general of WHO on Friday at a news conference. "These dots are actually very concerning," he added.
2. Warning from economists
The International Monetary Fund (IMF) has warned that while China's economic growth has been hurt by the epidemic, its spread to other countries could derail a "highly fragile" projected recovery in the global economy in 2020.
On Monday morning, economists at Citi said that the spread of fear of the virus is faster than the spread of the virus itself. In its note, the brokerage also said consumption is declining as human contact is being minimized to control the spread of infection along with the closure of stores, factories due to lack of supplies or other related reasons.
In China, which was just recovering from the impact of its trade war with the US, most economists expect at least a short-term blow on its economy.
As the uncertainty on the impact and duration of the outbreak remains, investors are parking funds in safe-haven assets like gold and silver.
3. Weakness in rupee
Weakness in the Indian rupee which touched its near two-month low on Monday also added to the increase in the precious metal's price in India.
The rupee fell to 71.89 against the US dollar, the lowest since 8 January. The domestic currency is reflecting losses seen in its Asian peers on Monday.
Further, the increase in the US dollar's value, also a safe haven asset in times of economic doubts, hurt the rupee.
Gold prices in India are impacted by the dollar's value as the country's demand for the metal is largely met by imports. A weaker rupee also makes the metal costlier for domestic buyers.
4. Investors cautious on equities
Sales of many large companies are expected to be hit this quarter amid coronavirus the scare.
China, a global hub for manufacturing has paused production of consumer goods like phones, clothing, and automobiles for several weeks. Supplies of various large-scale companies have been hurt by the limited movement within as well as to-and-from the country.
Apart from production, the world's second-largest economy is also a major consumer for many big brands that have shut their operations.
Last week, Apple Inc, the world's most valuable tech company said it is reducing its revenue target amid the epidemic.
Investors are concerned about the economic impact of the virus on operations of various companies, especially those where China is key to their supply chain.
Fewer investors are taking the risk of holding on to shares in the current scenario and placing funds on safer assets instead.
5. Key interest rates remain low
As the 2019 scare of a slowdown in global economic growth repeats, central banks around the world are expected to maintain a dovish stance on their monetary policies.
Last week, China's central bank, the People's Bank of China, cut the one-year loan prime rate from 4.15 percent to 4.05 percent, its first reduction since October 2019, to support its economic growth.
In the international market, spot gold has climbed as high as $1,678.58 an ounce in the recent session, higher than the $1,500 levels seen last year when the US Federal Reserve cut the Fed Funds rate by 75 basis points.
In the US, while the economy continues to grow at a moderate pace, the odds of a rate hike are slim as the country heads towards its Presidential election.