Gold Price Above Rs 42,000 After US Fed Raises Support Measures

On Tuesday, gold futures on MCX opened higher at Rs 42,184 per 10 grams before mellowing to Rs 41,271. The metal's prices in India are mirroring gains seen in the international market where spot gold rose close to 2 percent to $1,578.83 per ounce after the US Federal Reserve announced unprecedented measures to support the American economy.

A significant surge was seen in the previous day as well when spot gold rose by 4 percent.

For the first time, the American Central Bank will back purchases of corporate bonds, backstop direct loans to companies and will "soon" roll out a program to get credit to small and medium-sized business.

Back home, the Reserve Bank of India (RBI) on Monday announced measures to continue to support liquidity in the financial system.

The central bank said that as "a pre-emptive measure to tide over any frictional liquidity requirements on account of dislocations due to COVID-19", it has decided to conduct the fine-tuning variable rate Repo auctions for Rs 1 lakh crore in two tranches of Rs 50,000 crore each, on 23 and 24 March.

Further, it has advanced its purchase Government securities under Open Market Operations (OMOs) scheduled for 30 March to 26 March.

Additionally, three of the world's largest gold refineries on Monday said that they had suspended production in Switzerland for at least a week to curtail the spread of the virus.