When trading commenced for the third week of the month, 24K gold rate in India was recorded holding at Rs.40,750 per 10 grams on 10 February 2020 on account of the coronavirus outbreak that weighed on the markets.
Strong safe-haven demand, coupled with the tumbling US dollar index ensured that the bullion gained towards the beginning of the week.
However, with the virus outbreak concerns being subdued after a decline in the number of cases globally, the US dollar gained lost ground against a basket of major emerging currencies.
This led to investors gravitating towards riskier assets and gold price in India dropped by over Rs.100 to Rs.40,650 per 10 grams on 11 February 2020 amid the weak market trends overseas.
Also Read: Demand for Gold Has Hit a Three-Year Low
On 12 February 2020, gold rates dropped by another Rs.50 as the declining number of confirmed coronavirus cases in China subdued fears of a global economic impact. Also, this increased the risk appetite for investors and gold was recorded trading as low as Rs.40,600 per 10 grams when trading closed for the day.
However, safe-haven demand for such as gold and silver soon recovered the next day as the news of sharp incline in the number of deaths and confirmed cases in China hit the market.
Strong demand for safe-haven assets coupled with the easing US dollar led to gold prices in India recovering to Rs.40,750 per 10 grams on 13 February 2020.
Despite a significant drop in prices – up to Rs.510 per 10 grams – on 14 February 2020, gold rates in India soon picked up to near one-week high levels as the virus toll in China increased demand for safe-haven investments. However, the recovering dollar capped the gains on the bullion and gold in India was recorded trading at Rs.40,750 per 10 grams on 15 February 2020.
When the week came to an end, gold rates in India was recorded holding at Rs.40,760 per 10 grams on 16 February 2020 on account of the unfortunate yet positive global cues for the bullion coupled with the increased safe-haven buying in the market. Also, this was the highest recorded figure during the week.
For any clarifications/feedback on the topic, please contact the writer at viswanathan.v@cleartax.in
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