Mirroring Monday's rally seen in the international market, gold prices in India rose sharply on Tuesday. On MCX, gold futures (June 2020) were trading Rs 1,538 or 3.5 percent higher at Rs 45,260 per 10 grams at the time of writing, after hitting Rs 45,724 in intraday trade, a new all-time high.
On the previous day, gold prices in the global markets touched a four-week high, replicating recovery in equity markets on slowing coronavirus fatalities in Asia. Spot gold climbed 2.8 percent on Monday and despite a decline, traded above $1,650 an ounce on Tuesday.
Commodities markets were closed on Monday in India on account of Mahavir Jayanti.
A similar movement was seen in silver prices. Silver futures on MCX (May 2020) surged over 5 percent or Rs 2,088 to Rs 43,311 per kg on Tuesday.
While central banks around the world are announcing measures to protect their financial systems, a near-total closure of the American businesses due to the restrictions imposed by authorities to control the spread of the coronavirus has caused worry among investors that the economic data from the US will remain unreliable in the coming months.
It has become harder to get a clear picture of the severity of the global recession caused by the pandemic at hand, causing traders to seek refuge in the safe-haven metal.
In India, Fitch Ratings cut India's GDP growth projections sharply from 5.1 percent to 2 percent for FY 2020-21, a 30-year low. The rating agency said that the lockdown in China will have a broad-based effect on regional manufacturing supply-chains as the pandemic has now broadened to include local discretionary spending and exports. It said that Indian businesses will continue to face supply-chain disruptions even as parts of China return to work.
Fitch is also expecting a global recession in 2020.
Meanwhile, a Reuters report citing sources said that India's gold imports have plunged more than 73 percent year-on-year in March to their lowest in 6-1/2 years as high domestic prices and lockdown curb retail demand.