Rising gold prices: Is coronavirus to blame?

Hyderabad: While gold prices in the country are surging, gold merchants in Hyderabad are of the opinion that perhaps Coronavirus could be one of the reasons. With over 2,000 deaths confirmed due to the disease in the top gold-producing country, businessmen say that investors are moving towards safer assets like gold, keeping in mind the negative impact of Coronavirus on the economy.

Speaking to NewsMeter, Deepak Agarwal, a gold trader from Abids said “India being the second largest consumer of gold, it is obvious that demand is always there for it. With Coronavirus and related rumours, businessmen are investing in gold to be on the safe side, since it is one of the less risky assets. Fear of the disease impacting the global economy will motivate investors to put money in gold, which partially explains the price rise.”

As per updates from commodity exchange MCX, gold prices crossed Rs 42,000 per 10 gram on Friday. Market analysts further believe that this momentum will continue into the next few months.

Bbusiness analyst Boorugu Mahabaleshwar Rao opines that uncertain situations like the latest one have a role to play in the rise in prices.

“Since the past three years, there has been an average 16-25 percent increase in prices. So, you don’t need to expect large deductions in gold prices in the future. War-like situations and uncertain political situations are also directly linked to this, as it does with stock markets” he said.

However, several other factors also come into play with regard to the gold price surge.

Tejanath Busetty, a gold merchant from Kadapa, says that the new GST rules over gold have affected purchases.

“What is happening now is that the demand is high, while the supply is low. Marriages in India is like a season. But customers are not ready to pay GST. So this means, jewellers need to buy gold from mediators, while at the same time handling government’s control over smuggled gold and buying gold only from government-issued suppliers.”