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Mumbai: Gold in rupees hit a record high Monday to trade just Rs 251 below the psychological Rs 50000 per 10 gm mark on Monday. The Indian rate for 24 carat rose to a record Rs 49749 per 10 gm, including 3% GST, as international gold surged to a fresh one month high of $1753 an ounce on safe haven demand amid a biggest one day spike in Covid cases globally and fears of extended global slowdown due to the pandemic.

Demand in India, the world’s second largest gold consumer after China, remains tepid due to lower disposable income and virus related restrictions.

“Demand is around 35-40% of normal at this time of year,” said Amit Modak, CEO, PNG & Sons. “The rise in rate, restrictions on shop timings due to the pandemic and lower disposable incomes especially among low ticket size buyers have crimped demand.”

Even in Zaveri Bazaar, India’s bullion and jewellery hub, demand remains weak since re-opening on June 5 after over two months of a nationwide lockdown to prevent the virus outbreak. However, marriage- based buying has commenced with most weddings deferred till September and beyond.

“Customers are scared to visit shops in the current times, though people have started buying for the marriage season,” said Kumar Jain of UT Zaveri, a retail jeweller in Zaveri Bazaar.

“Marriage season buying has commenced in a small way in certain places as customers feel prices could rise further or over fears of another lockdown,” added Modak.

Gold of 22 carat which is used to make jewellery also hit a record high of Rs 45,570 per 10 gm. The prices are based on those provided by India Bullion and Jewellers Association (IBJA) which exclude 3% GST. IBJA rates are used by RBI for pricing of Sovereign Gold Bonds, which are gaining popularity as an investment tool.

“While demand for physical gold will pick up in forthcoming months, investment demand as observed by ETF flows are surging on haven buying and rising inflation expectations,” said Surendra Mehta, national secretary, IBJA.

Gold ETFs in India saw Net inflows of Rs 815 crore in May on haven buying.



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