Gold prices soared more than 4 per cent overnight, shrugging off early losses after the US Federal Reserve took aggressive new steps to combat the economic impact of the coronavirus outbreak, boosting investor sentiment.
The U.S. central bank said it would begin backstopping an unprecedented range of credit for households, small businesses and major employers in an effort to offset the "severe disruptions" caused by the coronarvirus outbreak.
At 3:50 pm, gold futures for April delivery rallied by Rs 1,062 or 2.57 percent to Rs 42,441 per 10 grams as against the previous close of Rs 41,379 on the MCX.
US gold futures climbed 0.5% to $1,668.60.
"The market reacted instantly with equities and gold soaring behind the Fed's new "Draghi" approach".
Meanwhile, almost one in three Americans were ordered to stay home to slow the spread of the disease, while Italy banned internal travel as deaths there reached 5,476 and China reported 46 new cases on Sunday that were mostly imported from overseas.
United States stock index futures surged more than 3 per cent, while the dollar fell over 1 per cent against major currencies after the Fed's latest announcement.
Gold prices edged lower in volatile trade on Wednesday as a flight to cash offset growing hopes for a massive USA economic stimulus to stem the coronavirus outbreak's economic toll.
Goldman Sachs has told investors to continue buying gold as the precious metal is the only asset that will protect them as central banks restart their money printing policies in a bid to fight off an economic catastrophe. The Indian stock markets are seeing a tremendous decline on Monday.
Goldman reaffirmed its 12-month target for bullion to advance to $1,800 an ounce, saying that both near-term and long-term outlooks for bullion were looking far more constructive. The metal jumped more than 3 per cent in the previous session.
Indicating investors' appetite for gold, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 1.3% to 935.98 tonnes on Tuesday. South Africa, which accounts for 75 per cent of the world's platinum and 38% of palladium supply, said it will close its mines for 21 days as part of a nationwide lockdown.