Gold prices in the international markets eased on Friday but were on track to record their biggest weekly gain since 2008 as economic damage from the COVID-19 pandemic improved the appeal for the safe-haven asset.
Spot gold was last seen trading at $1,628 an ounce, which is over 9 percent weekly gain, the highest since 2008, as governments and central banks in major economies, including India, announced stimulus packages to curb the economic effects of the virus outbreak.
In India, gold futures on MCX, which opened at Rs 40,721 per 10 grams on 23 March and ended the week at Rs 43,571.
Experts say that despite the cushioning from governments and central banks, the prevailing uncertainty on when the curve of the spread of the disease flattens is likely to dictate the movement in the gold prices.
Over the week, there was sharp surge in the number of cases reported. The epicentre of the outbreak has moved from China to Europe and now the US, where over 1 lakh cases of infection and at least 1,700 deaths have been reported so far.
Spain has seen over 5,000 deaths, surpassing China to become the country with the highest reported death toll from COVID-19, after Italy.
In Italy, 919 new deaths were reported, the highest number of fatalities any country has reported in a span of 24 hours since the start of the pandemic. Total deaths stood at 9,134 with more than 86,000 confirmed cases.
The world is now watching to see if the curve flattens in Italy as China reports much fewer deaths and new infections (largely imported cases) this week.
Further, the news of the US becoming the new epicentre is worrying as the world economy largely relies on American markets and its consumers. While there is hope from the recently announced $2 trillion stimulus package, reports suggest that there was a spike in jobless claims numbers in the country at over three million and many were laid off amid shutdowns.
Economic data to be released in the coming days will show the real impact of the shutdowns and movement restrictions imposed by a number of countries across the globe.
Further, there have been shortages of supply of precious metals due to the travel restrictions and surge in demand for the bullion.
According to a Reuters report, trading in India came to a standstill this week as the country entered its 21-day lockdown to curb the spread of the virus. Discounts were pushed to their highest since mid-September, at close to Rs 1,300 per 10 grams.
"Physical trade has stalled. There won't be any movement for the next three weeks," said Prithviraj Kothari, managing director of RiddiSiddhi Bullions to Reuters. He further added that demand was nil even during the Gudi Padwa festival.
Apart from gold, other precious metal prices also rose due to shortage in supply from the shutdown in operations of refineries. Three major gold refineries were shut in Switzerland.
On MCX, silver futures rose to nearly Rs 41,000 per kg, closing on Friday at Rs 40,894.
Platinum and palladium were on track for their biggest weekly gains on record due to supply concerns from lockdown in their major producer South Africa.