Gold regains its appeal in the international market after US Federal Reserve announced an emergency interest rate cut to support its economy amid coronavirus fears. Spot gold rose 3 percent in the previous session and was trading at $1,644.97 an ounce on Wednesday.
Reflecting the global trend, gold futures on MCX rose as much as 0.5 percent on Wednesday to touch a high of Rs 43,669 per 10 grams.
After the Fed's rate cut, stock markets in the US closed lower while Asian stocks were wobbling on Wednesday. Lower interest rates along with ailing equity markets make gold an attractive safe-haven asset for investors, raising its value.
US benchmark 10-year Treasury yields slipped below 1 percent for the first time and touched its record low in the previous session.
The Hong Kong Monetary Authority (HKMA) also lowered its base rate by 50 basis points on the overnight discount window.
Panic grapples the world markets as COVID-19 spreads to around 90,000 people in 80 countries. The death toll from the disease has surpassed 3,000, a vast majority of which were reported in China.
The World Health Organisation (WHO) has declared the outbreak a public health emergency of international concern.
On Tuesday, finance ministers and central bank governors of G7 nations said that they would use all appropriate policy tools to achieve strong, sustainable growth and safeguard against risks from the virus that has fueled global recession fears.
WHO has warned of a global shortage of protective equipment to fight the fast-spreading disease as well as price gouging as the death toll from the respiratory illness mounted.