Analysts believe that gold prices are largely driven by interest rates, liquidity, how the currencies are moving and how the macroeconomy is performing rather than the demand and supply.
On one hand, increased industrial demand and safe-haven buying are making silver costlier, while on the other, there is little demand for physical gold.
Spot silver climbed 7.2 percent to US$22.8366 an ounce, the highest since 2013, before paring some of the gains to trade at US$21.81 by 10:43am in London yesterday.
In overseas market, spot gold jumped more than 1% on Wednesday to its highest in almost nine years, driven by a weaker dollar and safe-haven buying.
To offset the coronavirus economic fall out, economies around the world have been pumping in money and after the recent stimulus worth 750 billion euro announcement by the European Union, the U.S. is also discussing a next round of relief as extended unemployment insurance.
USA gold futures rose 0.9% to $1,860.40.
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"Spot gold prices for 24 karat in Delhi hit a new record high rallying by Rs 430, reflecting gains in worldwide prices", HDFC Securities Senior Analyst (Commodities) Tapan Patel said. "Improved risk sentiment and weaker United States dollar has benefited industrial metals as well".
With equities struggling to push higher, gold is likely to test $1,900/oz over the next few days and weeks, Hewson said, adding that only an improvement in the pandemic situation and the economy could stop gold's bull run. "Rising virus cases and US-China tensions have also underpinned the gold price".
Gold for immediate delivery rose as much as 1.3% to $1,865.81 an ounce, the highest since September 2011, and closing in on the all-time high of $1,921.17 set that year.
Like the money market and high-quality bond funds, gold benefited from investors' need to reduce risk, with the recognition of gold as a hedge further underscored by the record inflows seen in gold-backed ETFs, according to the WGC report.
Central banks have slashed interest rates and rolled out a wave of stimulus measures to cushion the economic damage from the pandemic, helping gold prices surge over 22% so far this year. This comprises Rs 11,594 crore silver futures compared with Rs 3,633 crore a year ago, and Rs 9,058 crore in gold futures compared with Rs 8,068 crore in the same period last year.
"Silver spot prices have outperformed gold so far this month, an interesting reversal of the norm", said Cailin Birch, global economist at the EIU.