Gold prices in India rose above the psychologically important level of Rs 50,000 for the first time on Wednesday, as expectations of further stimulus to resuscitate pandemic-affected economies raised the appeal of the metal as an inflation hedge.
Local gold futures hit a record high of 50,085 Indian rupees ($ 671.61) per 10 grams on Wednesday, taking their gains to 28% in 2020 after rising a quarter in 2019.
However, rising prices reduced retail demand for gold in India, the world's second largest consumer of precious metals.
Abroad, spot gold rose more than 1% on Wednesday to its highest level in nearly nine years, fueled by a weaker dollar and safe-haven purchases.
Although price increases have slowed retail demand, investment demand has improved lately, said a Mumbai-based bank trader and bullion importer bank.
"But the share of investment demand is very small compared to retail purchases," he said.
In the spot market, gold prices became discounts due to weak demand.
In light trade, distributors were offering a discount of up to $ 5 an ounce on official national prices on Wednesday, below last week's premium of $ 2. The domestic price includes a 12.5% import tax. and a 3% sales tax.
From Business News
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