Gold has rallied on US Federal Reserve's announcement of unlimited quantitative easing and programmes to support credit markets.
Spot gold climbed as much as 4.2 per cent to US$1,618.20 an ounce, before paring some of the gains. Gold futures were now trending at Rs 41,037 per 10 grams on MCX with an increase of 1.59 per cent or Rs 644.
"The Fed unveiled its biggest cannon seen to date - even bigger than in the great financial crisis", said Tai Wong, head of base and precious metals derivatives trading at BMO.
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.
USA gold futures climbed 1.6 per cent to $1,687.30.
The precious metal jumped, rallying with risk assets, after the US central bank said on Monday it would buy unlimited amounts of Treasury bonds and mortgage-backed securities to keep borrowing costs low.
Gold prices inched up in volatile trade on Wednesday, as growing hopes for a massive US economic stimulus package to stem the coronavirus outbreak's economic toll offset liquidation by investors looking for cash and to cover losses in other assets.
U.S. 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.
"When you're seeing so much wiped off the stock market on a regular basis, the shortfall has to be made up somehow and gold remains the favoured option", OANDA analyst Craig Erlam said in a note.
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.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 1.3 per cent to 935.98 tonnes on Tuesday.
At 11:51 am, benchmark equity markets benchmarks S&P BSE Sensex and NSE Nifty 50 were up 1.28 per cent at 27,014.98 and 1.19 per cent at 7,894.25 respectively, a day after Prime Minister Narendra Modi ordered a 21-day nation-wide lockdown to contain the rapid spread of the coronavirus.
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