The Global market experiences unpredictability as the biggest market in the world continues to be plagued with deadly Coronavirus. China is considered to be the biggest market in the world and has currently been battling the widespread of the virus. The virus has claimed over 1000 lives in the city of Wuhan, China. But, it has spread to other countries as well. The World Health Organization (WHO) declared the Coronavirus epidemic a global threat and the world must be on high alert to control the rampant spread of the virus into other parts of the world.
Investor’s demand in stocks and equity markets decreased since the beginning of this global epidemic which has granted support for safe-haven assets. Gold is considered to be amongst other safe-haven assets. Investors have pushed towards investing in the gold market due to fears of the impact of the Coronavirus on the equity market. The price of gold has gained momentum and the market has benefited in the past few months from the virus outbreak.
The end of the year 2019 towards the beginning of 2020 has observed many uncertainties globally from tariff duties between China and the USA to President of the United States, Donald Trump orders on the airstrike that killed a reputable Iran soldier, Qasem Soleimani and many more. The New Year entered into great growth for the gold market. The prices of gold shot up and were at new records high. In the Indian markets, gold prices surged higher as well.
Gold futures increased at Rs. 300 to Rs. 41,684 per 10 grams. On Multi Commodity Exchange (MCX), Silver futures also rose at 1.6 percent to Rs. 45,102 per kilogram. Spot gold surged higher by 1.2 percent to $1,602.90 per ounce. Other precious metals such as palladium increased from 0.7 percent to $2,610.62 per ounce. Platinum gained momentum at 1.9 percent to $880.10.
The current session holds a high demand for safe-haven assets. As many safe-haven assets shot up to the spotlight. While the Chinese yen rose to its highest since October against the US dollar. The depreciation of the dollar has played a factor that is supporting the gold market globally and locally. Factory activities in China are on slow progress as the fear of the Coronavirus takes over political attention. The vaccine to treat the virus which hasn’t been developed will set the gold market in a good position as investors will stay away from the equity markets to invest in gold. The USA Federal Reserve has announced to make expected interest rate cuts in import duties which will likely benefit and support the gold market in a big way.
In India, the government has to take on several initiatives to boost the demand for gold in the domestic market. The hallmarking of gold becoming mandatory to push consumer’s trust in the purchase of pure gold will impact the gold market and the gold monetization scheme to transform idle gold into an investment where deposits of gold can reap larger returns on investment. This will boost purchases in the gold market. Also, the gold bond scheme initiated by the government of India is set to kick start a new session for subscriptions. The bond scheme date will remain open until March 6th, 2020. The government will be selling gold bonds at ₹4,260 per gram with a 999 purity level and granting a 50 percent off for those making payments online.
The gold market continues to gain momentum as the global uncertainties remain unsolved and the cure for the deadly Coronavirus is yet to be found. This means the gold market will gain more support in the coming months.