Exports fuel fresh demand

DOMESTIC REVIEW/BULLION

Bullion prices flared up in the domestic market as the landed cost of gold shot up following high overseas advices. Fresh highs were also reported for silver in the domestic market.

Pure gold breached Rs 6125 per 10 gram during the week to settle at Rs 6120 as against last Friday's Rs 6060.

Standard gold also jumped from Rs 6020 to Rs 6080 per 10 gram. Silver zoomed up to an all time high of Rs 9010 as against previous Friday's Rs 8795 per kilogram.

Despite the price rise demand has not dried up completely because gold jewellery exports have increased.

"The export of jewellery has increased in last fortnight as the domestic price of gold is lower than international prices," Suresh Hundia, president, Bombay Bullion Association (BBA), said.

Gold has gained following weakening of the dollar. US data, which includes the trade deficit for October, will provide fresh direction for the dollar, which hit 11-year lows recently against the pound and approached record lows against the Euro on Friday.

US trade data indicated a big current account deficit. It raised worries that the world's largest economy will find it increasingly hard to attract funds to finance its deficit. The dollar hit three-year lows against the yen this week too.

The yen found additional support on Friday from news of an unexpectedly strong reading in the Bank of Japan's influential quarterly "tankan" corporate sentiment survey, although wariness of yen-selling intervention by Japanese authorities kept dollar bears at bay.

The dollar weakened as far as $1.7498 to the pound at 0800 GMT, its worst showing since October 1992, shortly after sterling left Europe's Exchange Rate Mechanism.

It also lost a quarter percent from the US close to $1.2246 per euro, a third of a cent above record lows set on Tuesday, which marked the end of a run of eight successive daily record lows.