The continuing lockdown due to the coronavirus has taken its toll on the Gold market in India as the physical trading of gold has come to a standstill due to the 21-day lockdown. Massive discounts are being offered over international prices, according to Reuters. Last week, discounts rose to their highest since mid-September, at $48 an ounce. The domestic price includes a 12.5% import tax and 3% GST.
Gold prices fell sharply in India today with June futures on MCX falling 0.6% to ₹43,302 per 10 gram, extending losses to the second session. Silver took a beating with May futures crashing 3% to ₹39,758 per kg. Gold rates in India had surged sharply last week rising about ₹3,000 per 10 gram in tandem with a rally in global rates.
As the fears of deepening of economic damage due coronavirus gained traction the gold prices moved higher in the global markets.
Spot gold was up 0.3% at $1,621.85 per ounce. A weak dollar also helped lift gold demand, making bullion cheaper for investors holding other currencies.
A recession warning by the IMF on Friday and exhorting the countries with ‘everything-on-the-table’ response with “massive” spending to avoid a cascade of bankruptcies.
The holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 1.17% to 964.66 tonnes on Friday.
In India, the Gold market remained wary about a supply squeeze following a sharp divergence in London and New York prices, as the coronavirus closed precious metals refineries.