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Gold prices continued the down trend and fell by ₹1,357 per 10 grams on Friday to ₹42,017 against ₹43,374 on Thursday.
From a high of ₹44,014 per 10 grams on Monday, gold (999 purity) has lost ₹1,997 in the last one week as dollar continued to appreciate against rupee amidst economic uncertainties.
Dollar gains
Gold (995 purity) was down at ₹41,849 on Friday against ₹43,200 on Thursday. In the past one week, dollar appreciated to 73.72 on Friday against 74.17 logged on Monday.
It is one of the rare occasions when both the equity and gold considered as safe haven has been falling in tandem as the global economy is threatened by fast spreading Corona virus outbreak.
Abhishek Bansal, Chairman and Managing Director, Abans Group, said that despite over seven per cent dip in domestic gold prices from the recent highs, consumer demand for jewellery is not picking up as prices are still above multi-year high levels.
However, he said investment demand could pick up in gold as uncertainty due to the coronavirus outbreak and monetary easing measures by global central banks could support the safe-haven asset.
Economic activity is slowing down across countries and many countries such as in Italy, China and Iran are facing a lockdown. The US has implemented a blanket travel ban from the EU nations for 30 days. Snehal Choksey, Director, Shobha Shringar Jewellers said that normally on a macro level, such a huge stock market crash leads to a safe haven buying of gold. Hence, the price of bullion could see a surge in the coming days but as far as the local jewellery industry is concerned, there is a lull in demand, more so because of the Covid fear and the steep rise in gold prices in the last two months.
The World Health Organisation has declared the coronavirus as a pandemic, and its economic effect could worsen in the next quarter. The world economy could recover from this setback only in the second half of 2020, said Bansal.
“Buying would return to gold on account of a possible slowdown in the larger economies and stimulus measures by central banks. Governments could infuse liquidity. Low interest rates could support gold prices as financing costs will be lower, and the funds will move to the safe-haven assets,” he added.
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