Bullion takes another leap forward

Silver at all-time high of Rs 20,155, Gold at Rs 8,955

Silver prices zoomed past the psychological level of Rs 20,000 per kg to touch a new all-time high of Rs 20,155, as overseas prices of precious metals and crude oil rose owing to tensions in Iran and inflation woes.

The white metal prices also pulled up gold prices to Rs 8,955 per 10 gm.

Overseas spot silver price rose to a new 24-year high of $13.33 per troy ounce. Gold rose $6 to a new 25-year high of $606.10 a troy ounce.

Crude oil rose 54 cents to touch the psychological level of $70 a barrel and nudging closer to the all-time high of $70.85 set on August 30, 2005.

Funds and other institutional players are shifting their investments to precious metals, especially gold, which is considered to be a good hedge against inflation.

Other reasons fuelling the rise in silver and gold silver prices are the soon-to-be-announced launch of the exchange traded fund, said V Sivaramakrishnan, executive director of Dubai-based Kombench DMCC.

In a bid to tackle the rising inflation, the market expects the US Federal Reserve to hike interest rate by another 25 basis points to 5 per cent in its upcoming meeting on May 10.

The Fed has lifted rates 15 straight times to 4.75 per cent.

Market players expect gold to surge to $620 levels and silver to touch $14 a troy ounce before it looks for fresh direction.

"The rally in gold from $600 upwards is purely the Iran premium and this leg can easily break. Technical or commodity traders are already keeping off the market and all the buying is from the investors and funds in other asset classes who are trying to put in an insurance against a possible war scenario," said the head of a brokerage house.

The domestic market saw good buying in both previous metals largely from institutional investors, said a Mumbai-based trader.

Further, gold prices remained firm in the hope of good demand in the ongoing wedding season, which started on April 12 and with Akshayatritiya, an auspicious occasion to buy the yellow metal, on April 30.

According to market players, domestic futures trading saw gold rising Rs 50 per 10 gm and silver by Rs 500 a kg when the international market were closed for the Easter holiday.

"This marked an alignment of the Indian market in the global scenario. The Indian market, in a way, set the direction for the international market as the latter opened at Tokyo today," said Sivaramakrishnan.