Gold prices today rise to another record high, silver rates drop

Gold is up 15 per cent this year buoyed by unprecedented stimulus to aid the global economy which has been hurt by the lockdowns due to the coronavirus pandemic

Since March of Rs 38,500 per 10 grams, Gold prices have rallied over 25 per cent to scale a new high today.

Palladium gained 0.2% to $1,914.48, while platinum jumped 1.6% to $818.18. On the other hand, the silver rates plunged with the futures losing around 0.14%. Shares of Newmont, the world's largest gold company, are up 36 per cent this year, while Australian producer Evolution Mining has surged 43 per cent.

Gold is on the cusp of challenging the hard-to-crack $1,800 an ounce mark, potentially opening the way for a move toward its record price, as a resurgence in virus cases risks impeding the global economic recovery.

Gold prices rose on Wednesday as concerns over rising inflation, due to powerful central bank stimulus to stem the economic impact of the coronavirus pandemic, kept bullion well bid over a 7-1/2 year high reached earlier in the session. U.S. gold futures rose 0.2% to $1,785.80.

Indicative of investor sentiment, holdings in SPDR Gold Trust, rose 0.28% to 1,169.25 tonnes on Tuesday, its highest since April 2013. "Hence we are cautiously optimistic".

USA seeing 'disturbing surge' in COVID-19 infections
While some of the increased numbers of cases can be attributed to more testing, the percentage of positive tests is also rising. While Donald Trump has said the coronavirus is "fading", it's actually surging in many states, according to USA health experts.

In the week that ended June 21, COVID-19 cases in the USA surged by 25% compared to a week earlier based on estimates.

In the meantime, the US Treasury Secretary Steven Mnuchin said on June 23 that the next stimulus bill will focus majorly on getting people back to work rapidly. He aslo said that he would consider a further delay of the tax filing deadline.

Gold has gained almost 16% this year supported by global stimulus measures since the non-yielding metal is considered a hedge against inflation and currency debasement. "A sustained decline in USA 10-year real yields will provide support for gold futures".

Gold prices in the previous session held on to prices as rupee inched higher against the dollar to levels below 76.

While the increase in infection is positive for gold, demand from the world's second biggest bullion consumer India is likely to remain paralysed since the country is also seeing a spike in cases, Commerzbank said. Holdings in bullion-backed exchange-traded funds have soared to a record, rising nearly 600 tonnes this year.

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