Gold prices in India edged higher on Saturday at the commodities market, that is open for a special trading session on the Union Budget day. On MCX, gold futures (5 February) rose to Rs 41,200 per 10 grams, up by 0.5 percent, closer to its all-time high of Rs 41,293 seen last month.
Silver futures on MCX were trading 0.15 percent higher at Rs 47,050/kg. The surge in Indian markets is supported by an increase in international prices on concerns of an economic slowdown from coronavirus epidemic.
As the death toll in China from outbreak hits 259, US spot gold rose by 0.75 percent to $1,585.8 per ounce on Friday. Having gained 4 percent in January, it was also the best month in the international market for the metal since August.
In times of uncertainties, the precious metal has served as a safe haven asset for investors. In India, its prices were further weighed by the increase in customs duty from 10 percent to 12.5 percent announced in Union Budget 2019.
A recent report from World Gold Council showed that the demand for gold in India fell by 9 percent to 690.4 tonnes in 2019 when compared to 760.4 tonnes in the previous year due to increase in domestic prices.
WGC expects demand for the yellow metal to pick up in 2020 to 700-800 tonnes.
"As policy measures unfold, broader economic growth accelerates and local prices of the past six months become more acceptable among households, India's gold demand will be in the range of 700-800 tonnes in 2020," said Somasundaram PR, Managing Director of WGC's India operations.
While government's move to make quality verification (Hallmarking) mandatory for gold retailers (to become effective in 2021) has been well received, the industry participants are expecting a slash in import duty, which is hoped to control smuggling activities and revive demand.