At 12.03 pm, 10 grams of 24 carat gold (99.9% purity) was priced at Rs 52,050 in Mumbai, Rs 51,855 in Delhi, Rs 51,850 in Bengaluru and Rs 51,625 in Kolkata. Silver futures due for a September 4 delivery climbed to a record Rs 60,782, surging 6 per cent from their previous close of Rs 57,342. Sky-high prices have already dampened retail demand for gold in India, the world's second largest consumer of the precious metal.
Gold prices in the national capital hit a new record high rising Rs 430 to Rs 50,920 per 10 gram on Wednesday, reflecting gains in the global prices of the precious metal, according to HDFC Securities. Typically, any sign of uncertainty in the capital markets boosts the appeal of gold as a safe-haven bet, as investors rush away from riskier asset classes.
In the worldwide market, gold was trading higher at United States dollars 1,855 per ounce and silver at USD 21.80 per ounce.
Analysts believe that gold prices are largely driven by interest rates, liquidity, how the currencies are moving and how the macroeconomy is performing rather than the demand and supply.
Spot gold was up 1 per cent at $1,859.56 per ounce by 0713 GMT, after hitting its highest since September 2011 at $1,865.35 earlier in the session.
But India's gold imports in the April to June 2020 quarter fell 96% to 13 tonnes over the same period in 2019, after shipments ground to a halt in April and May due to the coronavirus pandemic.
Getty ImagesHelping bullion's rally, the dollar index held near a more than four-month low.
In March, commodity exchanges cut down trading hours, in a shift from the practice of allowing trading till midnight, in the wake of coronavirus pandemic.
"Spot gold prices for 24 karat in Delhi hit a new record high rallying by Rs 430, reflecting gains in worldwide prices", HDFC Securities Senior Analyst (Commodities) Tapan Patel said. "Rising virus cases and US-China tensions have also underpinned the gold price".
The bullish run recorded in the gold market is firmly entrenched so its expected, the rally might push gold to hit $2,000 before the end of 2020.
Precious metals rallied to their highest levels in years on Tuesday as a fresh economic stimulus in Europe and a weak USA dollar boosted prices.
"Silver has been a misunderstood component of the reopening because the industrial part that held it back for months is now in its back, propelling it forward", Gero said, noting he sees the metal's price climbing to as high as $22 by year-end and the gold/silver ratio falling to around 80.
The vast amounts of stimulus from governments and central banks have also aided prices, and after the success of a European rescue package this week, the focus turns to negotiations on legislation to prop up the U.S. economy.