Local gold futures hit an all-time high of Rs 48,871 ($646.66) per 10 grams in early trade, taking their gains to 25% in 2020 so far. The contract had gained nearly 25% in 2019.
However, this dampened the retail demand for gold in India, the world’s second largest consumer of the precious metal.
“Retail demand is negligible. Buyers are postponing purchases anticipating a correction in prices,” said a Mumbai-based bank dealer with a bullion importing bank.
In thin trade, dealers were offering a discount of up to $22 an ounce over official domestic prices on Wednesday afternoon, up from the last week’s $18. The domestic price includes a 12.5% import tax and 3% sales tax.
The country’s gold imports in May plunged 99% from a year earlier as international air travel was banned and jewellery shops were closed amid a nationwide lockdown to curb the spread of coronavirus.
In overseas market, spot gold firmed near an eight-year peak on Wednesday, as a spike in coronavirus cases in the United States and many other countries has cast a shadow on hopes for a quicker global economic recovery, driving inflows into safe-haven assets.
According to a latest Reuters tally, the coronavirus has infected more than 10.48 million people worldwide so far.