Stock markets around the globe are experiencing a sell-off over the fear of a rapid spread of coronavirus outside China. It has raised the demand for gold, a safe-haven asset for investors in times of uncertainty.
On MCX, gold futures (April 2020) rose close to 1 percent to Rs 42,820 per 10 grams on Thursday, while in the international market, Spot Gold was up 0.5 percent to $1,648.14 an ounce.
US stock futures slipped sharply on Wednesday night after the country's Centers for Disease Control and Prevention confirmed that an individual in California has contracted the coronavirus but do not know how. It could be the first possible "community transmission" of coronavirus in the US as the patient had no relevant travel history or exposure to another patient with the virus, the US health authorities said.
Dow futures fell nearly 400 points following the news. Asian markets also fell as investors remain cautious of the fast-spreading virus that has infected over 81,000 people and killed nearly 2,800.
In India, Sensex and Nifty extended declines for the fifth consecutive session. Japan's Nikkei 225 fell over 2 percent on Thursday.
Further, hopes of interest rate cuts by major central banks have also supported the yellow metal. On Thursday, South Korea's central bank surprised markets by holding its benchmark interest rate at 1.25 percent when analysts polled by Reuters expected a cut. The country's equity benchmark index Kospi was also trading lower following the unchanged interest rate.
Despite the highest number of deaths and infections reported in China, the sudden surge in the number of coronavirus cases outside the country, especially those that have no connection to the country, has caused panic.
In South Korea, the total number of confirmed cases is now over 1,200. In Italy, about 400 people have contracted the disease, while in Iran 16 deaths have been reported from the virus. Iranian Deputy Health Minister Iraj Hairichi announced that he has also been infected by the virus.
Gold prices expected to climb further
Experts have forecasted gold prices to climb higher amid the growing uncertainties of the epidemic that could be a potential pandemic.
Goldman Sachs Group Inc sees gold hitting $1,800 an ounce as the virus continues to threaten global economic activity. It should also be noted that 2020 is a US election year, which is known to raise gold prices.
Analysts at Citi have forecasted gold to top $2,000 an ounce in the next 12 to 24 months.