Gold prices in India hit a record high of Rs 50,000 per 10 grams on the Multi Commodity Exchange (MCX) Wednesday following a rally in international spot prices that rose to highest in nearly nine years on hopes of more liquidity stimulus and a weaker dollar.

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At 11:20 am, gold futures for August delivery rose Rs 498 or 1.01 percent to Rs 50,025 per 10 grams as against the previous close of Rs 49,527 and opening price of Rs 49,931 on the MCX. The gold prices touched all-time high of Rs 50,043 per 10 grams.

Meanwhile, Silver futures rallied by Rs 3,490 or 6.09 percent to Rs 60,832 per kg. The prices opened at Rs 58,000 as compared to the previous close of Rs 57,342 per kg.

“The gold prices are rising on sustained concerns over coronavirus and huge amount of liquidity infusion in the market to tackle the pandemic-induced slowdown. Weak US dollar also supported the yellow metal prices,” said Ajay Kedia, director, Kedia Commodity Comtrade.

International gold jumped more than 1 percent to its highest in nearly nine years, driven by a weaker dollar and as expectations of more stimulus to resuscitate pandemic-hit economies lifted the metal's appeal as an inflation-hedge, a Reuters report said.

European Union leaders on Tuesday sealed a 750 billion euro recovery plan, while White House officials and top congressional Democrats discussed another round of relief that would include extended unemployment insurance and more money for schools, the report added.

Spot gold was up 0.8 percent at $1,856.13 per ounce, after hitting its highest since September 2011 at $1,865.35 earlier in the session. US gold futures rose 0.7 percent to $1,856.80.

“Comex gold has breached the important resistance level of $1,820 and now can it may rise towards $1,880 level,” Kedia added.

On MCX, gold prices were trading at all-time high of Rs 50,000/10 grams level and may test Rs 50,600-50,800 level going ahead as fundamentals are supporting, analysts said.

“Support for gold is placed at Rs 49,600 while resistance is seen at Rs 50,850 level on MCX,” Kedia added.

Also Read: Gold or equity mutual funds: Which is a better investment option?

Earlier this month, Kishore Narne, Associate Director-Head - Commodity & Currency, Motilal Oswal Commodity told CNBC-TV18 that gold prices may hit Rs 65,000 - 68,000 per 10 grams levels before December 2021 depending upon the currency trajectory.

“The rally in gold is fuelled by the global growth concerns and the unprecedented amount of liquidity infusions by central bankers. Moreover, low or negative interest rates in many countries, which may continue at least for next 18-24 months and the big slippage of fiscal deficits across emerging markets could push some of the emerging markets currencies weaker taking the gold price higher,” Narne had said.

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.

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First Published:Jul 22, 2020 11:27 AM IST