Gold Hits All Time High Of Rs. 49,348 Per 10 Gm: 5 Reasons For Sharp Spike

1. Global Rally in gold price:

In international markets, while earlier news reports suggested that gold this year would hit a new high in dollar terms too, that day is still to be reached. But today as investors moved their holdings into gold on rising uncertainty, it surpassed its 2011 high to scale to $1815 per ounce.

2. Additional stimulus hope:

In a scenario when liquidity is being increased consistently by global central banks this time to combat the fall out due to coronavirus, gold gains as a ‘safe haven' asset. Gold is seen as a hedge against currency debasement and inflation.

3. Rupee depreciation is one trigger:

While for some time rupee gained ground to levels of 74.50 per US dollar mark. It failed to hold on to gains as dollar recovered its lost ground as a safe haven and on July 8, 2020, the domestic unit closed at 75.02 per US dollar.

4. Rising coronavirus cases both in India and world:

This has again a fillip to the demand for gold as a safe haven which gets more demand due to economic risk being faced. In India at the time of writing corona positive cases have crossed that of Russia to have the third largest tally of such patients.

5. Gold ETFs netting a record inflow:

Uncertainty at a global level has brightened the prospect of gold with inflow in gold ETFs being at a record $40 billion so far, this is the new record after the previous highs recorded in 2016, the report by World Gold Council says.

This is even as the physical demand for gold is not known to gain traction amid covid 19 blues.

What Should Investors Do?

Every dip can be a buying opportunity in the precious yellow metal, though one can not negate short term correction in the price, given the steep price rise since the start of the calendar year of 25% in 2020 alone.

GoodReturns.in