Gold continued its upward march to hit another new high of ₹52,519 per 10 gram, gaining ₹1,395 or three per cent on the back of bullish trend in the global markets.

Silver prices tagged along with an increase of 8 per cent to ₹64,505 per kg against ₹59,885 registered on Friday.

The yellow metal opened on a strong note at ₹52,135 per 10 gram against the previous close of ₹51,124 on the back of simmering tension between the US and China and expectations of another stimulus package in the US.

Weak dollar

Spot gold in the US also hit a 9-year high of $1,928 per ounce surpassing the previous high of $1,920 logged in September 2011.

Top officials in the US government have indicated that the President Donald Trump on Sunday agreed in principle with Senate Republicans on a $1-trillion coronavirus relief package. Last week, the European Union leaders had agreed on an economic stimulus of over $850 billion.

The relief package is expected to weaken the US dollar and add further strength to the haven status of gold.

Poor demand in India, China

Meanwhile, the demand for physical gold in India remained weak due to high prices, while investment demand in the futures market peaked.

The yellow metal prices have spiked by about 28 per cent so far this year in rupee terms.

Gold for August delivery on MCX was up two per cent at ₹51,883 per 10 gram against previous close of ₹51,035. Silver for September delivery was up ₹64,960 per kg against ₹61,223 logged on Friday.

Ajay Kumar, Director, Kedia Commodities, said gold traded bullish on lingering concerns on state of the global economy and flaring geopolitical conflict between the US and China.

Though profit booking is expected with the gold inching to the crucial level of $2,000 an ounce, he said all long-term fundamentals are supporting firm gold prices in the coming days.

Meanwhile, physical global gold demand fell to 9-year low of 677 tonnes in June quarter due to record high gold prices in light of Covid.

Similarly, jewellery demand plunged to 20-year low of 240 tonnes as most jewellery shops in key markets of India and China remained shut, according to Refinitiv, formerly the Financial & Risk business of Thomson Reuters.