On Thursday, gold futures on MCX (Multi Commodity Exchange of India) was trading at Rs 49,152/10 grams after hitting a new all-time high of Rs 49,348 the previous day, largely due to international trends. Silver futures on the exchange also followed the yellow metal's rally and touched a high of Rs 51,480 per kg on Thursday.
Since India is highly dependant on imports to satisfy domestic demands for the yellow metal, gold prices in India are based on global rates and rupee's strength against the US dollar.
In the international market, spot gold (the global benchmark for the metal) breached the $1,800 an ounce level for the first time since 2011 on Wednesday as the coronavirus pandemic continues to infect people in large countries. With no clear end to the outbreak in sight, investors are scurrying for safe havens like the yellow metal, pushing its price to an intraday high of $1,800.18 per ounce.
Silver prices have also broken technical resistance at $18.40 an ounce in the US markets and analysts believe that this means that investors have turned bullish towards precious metals, which could take the prices higher.
"Investors are hedging their exposure to riskier assets simply because there's a growing and widening belief that any recovery is unlikely to be v-shaped," said Michael Hewson, chief market analyst at CMC Markets UK to Reuters.
"Markets generally tend to operate through a prism of optimism and that optimism is being tested at the moment and gold is benefiting from that."
In the US alone, confirmed infections for COVID-19 have surpassed 3 million. Further, the officials of the American officials expressed
concern that the surge threatened to pinch consumer spending and job gains.
The European Commission has also forecasted that the euro zone would drop deeper into recession this year.
The rally this year is largely due to increased buying seen in gold ETFs in North America and Europe, as investors looked for safe-haven assets amid uncertainty induced by the pandemic. In 2020, so far, global net inflows into gold-backed exchange-traded funds (ETFs) have almost touched $39.5 billion, according to the World Gold Council. This beats the previous full-year record of $23 billion seen in 2016.