Crude tumbles; gold surges

The prices of crude oil in the international markets tanked on Monday, while gold prices surged as investors scrambled to the safer allocation of their monies amid fears of Coronavirus becoming a global pandemic.

Brent oil prices slumped 4% on Monday as the burgeoning coronavirus crisis sparked global energy demand worries. Indian economy is quite sensitive to global oil prices, as the country imports more than 80% of its oil needs.

At the time of filing, the Brent Crude futures in the international markets were trading at 55.73, down 3.83% from the previous close.

Conversely, on the London Bullion Market gold surged to $1,689.31 per ounce -- a level last seen in January 2013 -- as investors snapped up the precious metal as a safety measure amid the market turbulence. The gold had tested such levels last time in February 2013 in the international markets.

On MCX, April gold futures jumped 2.5% or about Rs 1,100 to Rs 43,771 per 10 gram -- touching an all-time high. Gold prices had surged about Rs 1,800 per 10 gram in the past week.

“The growing risk aversion is clearly visible in the sudden spike in safe-haven assets like gold prices seen lately and the surge in the volatility index (up 26% to 17.2). In addition to global uncertainties, the expiry weak and the fiscal year-end pressure only adds to the volatility in the near term,” said Gaurav Dua, Sr VP, Head – Capital Market Strategy & Investments, Sharekhan by BNP Paribas.

More and more investors parked their allocations in the gold, as the global indices witnessed a meltdown on Monday. Indian equity markets alone witnessed Rs 3 lakh crore of the investor wealth wiped off.

Rupee tanks

Even as the global crude prices witnessed a massive fall, the Indian rupee (crude price movement is inversely proportional to it), witnessed a huge fall on Monday.

The domestic currency fell by 34 paise to close at more than three-month low of 71.98 against the US dollar, tracking heavy selling in domestic equities and strengthening of the American currency in the overseas market.

At the interbank foreign exchange market, the local currency opened on a negative note at 71.94.

During the day, the domestic currency touched a high of 71.76 and a low of 72.01 and finally settled 34 paise lower at 71.98 against the US currency. This is the lowest closing level since November 13 when the rupee had settled at 72.09.

The rupee came under pressure from the foreign funds’ flight to safety, as foreign institutional investors withdrew a net of Rs 1,160.90 crore from the Indian equity markets.

(With inputs from agencies)