Gold prices on Wednesday hit a fresh high as economic uncertainty continues in the wake of the rising number of coronavirus cases. Gold futures on the Multi-Commodity Exchange (MCX) on Wednesday touched a new high and crossed the Rs 50,000 per 10-gram mark.
The August contract on MCX earlier in the day surged to a new high of Rs ₹50010 per 10 gram. Currently, the contract is trading at Rs ₹50010.00 per 10 gram, up from its previous close. The steady demand for the yellow metal continues as other assets classes including equities and properties are not doing well amid the economic slowdown.
Further, the highly unpredictable economic situation makes investors move towards the safe haven asset. A recent report by the World Gold Council (WGC) said that with investors looking at safer assets amid the Covid-19 pandemic, investment in gold is likely to make up for the fall in consumption demand for the precious metal.
The report titled ‘Gold Mid-Year Outlook 2020’ noted that in the current global economic environment, three factors are supportive of investment demand for gold — high risk and uncertainty, low opportunity cost and positive price momentum.
“Additionally, we expect investors to turn to gold as a means of hedging as we have seen in the first half of this year,” it said. According to a WGC report, like the money market and high-quality bond funds, gold benefited from investors’ need to reduce risk, with the recognition of gold as a hedge further underscored by the record inflows seen in gold-backed ETFs.