Gold prices rose to seven-year highs as concerns surrounding the spread of coronavirus beyond China gained ground.
Investors backed the safe haven asset even as China implemented fresh monetary stimulus measures aimed at offsetting the economic impact of the epidemic.
U.S. gold futures were trading at $1,629 an ounce at 10.30 am IST. Spot gold in India at the local jewellers rallied past the Rs 40,000 mark and was trading at Rs 40,350 per 10 grams for 22 karats. Similarly, for 24 karats gold the price was at Rs 41,450 per 10 grams.
Wednesday's minutes from the U.S. Federal Reserve's January policy meeting showed policymakers were cautiously optimistic about their ability to hold interest rates steady this year, even as they acknowledged new risks caused by the virus outbreak.
The US Fed's decision on interest rates are extremely important for future direction of the Indian metal. Should the US Fed continue to hold interest rates steady, we might see a further momentum in gold prices. All in all, it looks like the precious metal would continue to trend higher and the buoyancy in the metal continue.
Investors who have had a long-term perspective have been lapping-up the metal in the futures market. However, most analysts believe that even if there is a correction in gold, it could be temporary.