Gold prices surged as much as 1.8 per cent to hit record high of Rs 60,455 on the Multi Commodity Exchange (MCX) amid growing financial uncertainty forced investors to rush for safety of the yellow metal.
In international markets, gold prices rose 1 per cent to their highest since March last year on Monday as worries about the global banking sector returned to the fore despite rescue efforts by Swiss lender UBS to buy Credit Suisse to stabilise broader financial markets.
On Sunday, UBS agreed to buy Credit Suisse for $3.23 billion and assume up to $5.4 billion in losses in a deal backed by a massive Swiss guarantee. Bullion prices have rallied by 10 per cent, or about $180, on safe-haven demand after the collapse of US-based Silicon Valley Bank earlier this month, which ensnared 167-year-old lender Credit Suisse, news agency Reuters reported.
“Gold prices have risen almost 7-8 per cent in the past month. The rally in the yellow metal is primarily due to the banking crisis in the west. The liquidity infused by the central banks and the expectations of lower to no rate hikes is pushing gold prices up. Gold is a safe haven, historically it has gained in periods of uncertainty," said Colin Shah, founder and managing director of Kama Jewelry.
"Gold prices hitting a fresh high is a sign of slower economic growth and lower interest rates with ample liquidity to help the system steer of the current situation. The current situation globally may take some time to clear out. Globally, central banks have been adding gold reserves. The onset of the festive season in India starting from Gudi Padva will support demand at the retail level. We expect gold to gain further and touch new highs in the next few months. Domestically, it is expected to trade in the range of Rs 61,000-62,000/ 10gm. Internationally, it may scale levels of $2,050-2100/oz,” Shah added.
Banks led stock markets lower on Monday as Credit Suisse's takeover deal and promises of liquidity from central banks failed to stem fears of a bigger crisis brewing in the financial system. Meanwhile, market participants will watch out for outcome of US Federal Reserve policy meet outcome on Wednesday. Most of the analysts expect US Fed to raise rates by 25 basis points to tame inflation which has been at multi decade highs.
Back home, in spot market, fine gold or 24 karat gold was priced at Rs 59,670 per 10 grams, 22 karat gold was priced at Rs 58,240 per 10 grams, 20 karat gold was being sold at Rs 53,110 per 10 grams, 18 karat gold was priced at Rs 48,330 per 10 grams and 14 karat gold was priced at Rs 38,490 per 10 grams, according India Bullion and Jewellers Association.