Gold prices in India hit a record high on July 22, tracking a global rally, as expectations of more stimulus to resuscitate pandemic-hit economies lifted the metal's appeal as an inflation-hedge. Domestic gold futures reached an all-time high above the Rs 50,000 mark in early trade, taking their gains to 28 per cent in 2020 after rising a quarter in 2019. However, the price rise dampened retail demand for gold in the country, which is the world's second largest consumer of the precious metal.

Says Dr Saurabh Gadgil, Chairman and Managing Director, PNG Jewellers, “Gold has crossed the INR 50,000/10 grams barrier for the first time, reaching highs of INR 51,500/10 grams. This is on the back of a surge in gold prices in the USA market overnight which scaled to $1850/ounce. All- time highs in the USA market are currently at the $ 1930/ ounce levels. The value of gold scaled these highs during the last financial crisis in 2008 in the USA market.”

Already retail gold market is suffering because of the Covid-19 induced lockdown. This increase in gold prices is surely a big blow to the industry. Says Anantha Padmanabhan, MD, NAC Jewellers, “Investors have a good opportunity to invest in gold. The prices will surely continue to rise till November 2020. Price of silver also has increased, however, the prices of silver are likely to crash – because after such unprecedented rise occurs, the prices of silver usually crash. Export demand for gold too will see a decline. There is going to be a serious revolution in the gold and silver market in the days to come.”

In overseas market, spot gold jumped more than 1 per cent on July 22 to its highest in nearly nine years, driven by a weaker dollar and safe-haven buying. Gold has crossed the INR 50,000/10 grams barrier for the first time, reaching highs of INR 51,500/10 grams. This is on the back of a surge in gold prices in the USA market overnight which scaled to $1850/ounce. All-time highs in the US market are currently at the $ 1930/ ounce levels.

The value of gold scaled these highs during the last financial crisis in 2008 in the USA market. This time around, the world faces challenges on the health, financial as well as geopolitical front, thereby pushing the value of gold higher and higher. “I think gold will leave behind all previous highs this time around. Investments in gold look positive to bring high returns over a 2 to three-year timeline. On the other hand, we have seen a sharp rise in prices of Silver as well, crossing all - time highs of INR 60,000/kg,” added Gadgil.

There has been a sharp rise in the demand for physical gold and ETFs from fund houses and large investors taking big positions in gold and silver. It is phenomenal to know that 450 tonnes of silver and approximately eight tonnes of gold bookings have happened over night. This kind of hurried investment was never before seen in Gold or silver. This being another reason for the spurt in gold and silver prices. Uncertainties on global growth, trade wars, increase in coronavirus cases across the globe are all reasons propelling the price of precious metals upward. This trend is likely to continue.