India's gold price climbed to a new all-time high in the middle of the week. While the Indian rupee lost ground again and fell to a 10-week low, the nation’s benchmark gold futures contract soared another 3% at the Multi Commodities Exchange helping the domestic gold price to reach a new record high of 26,200 rupees per 10 grams. The Indian rupee´s heavy losses are primarily caused by the retreat of global stock markets as investors shun risks. India's benchmark index, the Nifty, has been suffering from strong sales pressure in recent weeks, since many investors are seeking safe havens such as gold.

India's investors have already been very nervous in recent months, in large part owing to the European Union´s escalating sovereign debt crisis. After the rating agency S&P cut the credit quality of the United States from AAA to AA + last Friday, these concerns have intensified. This week´s big losses in global equity markets has dampened sentiment among India’s investors, while the exit of global investors from Indian stock markets has forced the rupee down to a 10-week low. Global investors are increasingly fleeing India´s equity markets and have started repatriating capital to their home countries. However, gold is shining brighter than ever in the wake of the world´s escalating debt crisis, since investors want to safeguard their capital by buying the yellow metal and other tangible assets.

After the European Central Bank (ECB) announced this week that it would start purchasing Italian and Spanish government bonds, many are questioning whether or not the US Federal Reserve will be forced into more asset purchases. A growing number of market participants expect the Fed – in contrast to official statements – to announce a third round of quantitative easing (QE3) soon. Such a move would likely support equity markets. However, a potential announcement of another extension of the Fed´s bond purchase program could have negative long-term impacts on the Treasury bond market as well as the external value of the US dollar. Precious metals such as gold, silver, platinum and palladium, however, will likely be among the main beneficiaries of such a development.