Gold prices in the international market opened higher and touched $1,544 per ounce in the morning trade.
Chennai: Spot gold price in the Mumbai market touched Rs 40,000 per 10 gm as the international gold rates opened higher on Monday. A weaker rupee too supported gold prices.
While gold in the Mumbai spot market crossed Rs 40,000, in the New Delhi market, it rose to Rs 39,670, gaining Rs 720 per 10 gm. In the Multi Commodity Exchange, gold October futures moved up to Rs 39,340.
"MCX gold prices on Monday opened to record levels of 39,340.00, up by 1.28 per cent, following gains in overseas markets. Rupee too plunged to its lowest level in 2019 on Monday after a sharp re-escalation in the US-China trade war, which whacked investor confidence and darkened the global economic outlook," said Ajay Kedia, MD, Kedia Commodities.
Around the weekend, China had announced tariff hikes on $75 billion of US products and it was followed by US President Donald Trump's announcement of additional duty on some $550 billion of targeted Chinese goods.
US President Trump's reaction to Chinese decision and also to the US Federal Reserve's stand on rate cut led to safe haven buying in gold as the trade war worries escalated.
Gold prices in the international market opened higher and touched $1,544 per ounce in the morning trade. Prices also got a boost from the US 10-year treasury bonds yields, which dropped to their lowest since mid-2016.
However, prices fell back to $1,526 later in the day and recovered to $1,533 when Trump said on Monday that China had contacted US trade officials overnight to say they wanted to return to the negotiating table, welcoming the news as a very positive development for the world. Speaking on the sidelines of a summit of major industrialised nations, Trump hailed Chinese President Xi Jinping as a great leader and said he welcomed his desire for a deal and for calm.
In the Indian market, gold received some support from the rupee, which fell below 72. Weaker rupee made gold costlier in the market.
Analysts feel that gold still has more upside to scale as the fundamentals that are supporting gold are still there. However, prices could remain volatile. "Gold can see more upside towards $1,580-$1,590, But the risk of correction has increased. So better stay cautiously bullish,' said Himanshu Gupta, Vice President and Head of Commodities and Currencies Research, Globe Capital.