This week has proven to be very interesting for most financial markets. Particularly today, prices of both gold and silver are on the rise in a spectacular manner in India. This may not be sufficient to buck the seemingly negative gold price trend in other countries.
India Continues to buy Gold
It is evident that the industrial demand for most precious metals is on the decline as of late.Due to the coronavirus crisis, a lot of companies have been forced to reduce their overall output in one way or another. With this decreased output also comes lower demand for certain materials, including gold and silver.
Despite this problematic situation, India is still buying up ample gold right now. Indian markets have yielded sharp gains for both of these precious metals this week. One of the reasons for this sudden surge is the weakening rupee, forcing both consumers and investors to look for alternative solutions.
Ongoing price increases in India do not just affect the current gold price either. Gold and silver futures are both in the green as well, indicating that this upward momentum may not be over just yet. It is interesting to note how this country is setting a trend which isn’t necessarily followed by the rest of the world.
Another contributing factor to the surge of gold and silver is how various mining operations around the world have reduced their output or shut down temporarily. For gold, that could lead to a surge in price, once the demand picks up again. How this narrative will play out for silver, is difficult to predict.
Global Gold Trend Doesn’t Budge
Despite the prominent gold price momentum in India, it would appear that the rest of the world doesn’t share this optimism. According to most charts, the gold price is likely to go down slightly, rather than move up. Not entirely surprising, as the stocks markets are poised to go through another rough day, following yesterday’s losses.
Global financial uncertainty is still very much present today. Governments are pumping money into their domestic economy through quantitative easing and other measures. So far, none of them seem to have any positive effect whatsoever. Volatility continues to wreak havoc overall, and there is very little improvement in sight.
If the gold price can remain above $1,600 per troy ounce, there may not necessarily be much reason for concern. However, there is ample pressure on the market to drive the price back below this crucial threshold. The global coronavirus pandemic keeps making its mark on the financial markets, continuously creating an erratic situation.