Gold price rises amid corona virus scare

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Gold price rises amid corona virus scare

Gold price gained continuously through the week as investors rush to safe havens amid Corona virus spread. The Price spiral paused on Wednesday day before Bangladesh went under a lockdown.

The Bangladesh Jewellers Samity (Bajus) has decided to raise the price per bhori of gold by Tk1,400.  As a result, the price of high quality or 22 carat gold will now stand at Tk51,316. The new price would be effective from Wednesday, March 25, according to a Bajus.

However, the price of silver would stay unchanged at Tk1,050 per bhori. Previously, every bhori of 22 carat gold was valued at Tk49,339. According to jewellers , 22 carat gold contains 91% of the metal, while 21 carat gold contains 87%, while 18 carat gold contains 75% of the metal.

Why do investors buy gold?

In times of a crisis, investors globally view gold as a safe haven just the way they treat US government bonds and currencies like the US dollar or Poaka und Sterling.

Analysts commented that the precious metal acts as an effective portfolio diversifier and serves as a store of value, besides being a shield against inflation and a lender of last resort during economic uncertainties.

Why are gold prices rising?

Analysts said the fast spread of coronavirus cases outside of China and its potential negative impact on the world economy are prompting investors to take refuge in safe havens like gold. Gold prices, they noted, have remained firm despite aggressive policy-easing measures carried out by China to shore up its economy and moderate physical market activities

Does Taka value influence local gold prices?

A weak taka often pushes up gold prices, as Bangladesh meets bulk of its gold demand from through imports. A rise in gold prices, however, hits local demand for physical gold. Besides, any slowdown in global growth, muted inflation and fears of a recession cause central banks to pivot towards an accommodative stance, which buoys gold prices.

Why do central banks buy gold?

Central banks hold gold as a reserve asset, which is classified as monetary gold. Data showed central banks owned almost 14 tonnes of gold on last count. The increase in central bank demand for gold reflects current geopolitical, political and economic conditions, as well as structural changes in the global economy.

Will gold rate rise further?

According to the World Gold Council, many of the global dynamics seeded over the past few years will remain generally supportive for gold in 2020. In particular, financial and geopolitical uncertainty combined with low interest rates will likely bolster gold investment demand.

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