Gold sparkled to set a new record on Monday at Zaveri Bazar here on safe-haven buying by speculators and long-term investors, followed by a firm global trend. Investors returned to the market to book their position after a lull last week, which was dominated by seasonal holidays.
Standard gold (99.5) rose 1.2 per cent or Rs 345 to close the day at Rs 28,160 per 10g on Monday from Rs 27,815 per 10g on Saturday. The yellow metal breached its previous record of Rs 27,975 per 10g on August 20. Similarly, pure gold (99.9) rose Rs 355 to close the day at Rs 28,305 per 10g from its previous close at Rs 27,950 per 10g.
Gnanasekar Thiagarajan, director of Commtrendz Research, said gold broke its trend of moving inversely to the dollar. “Today, both gold and dollar are moving upwards. In fact, no rule works for gold today. People are just buying or selling the metal for risk appetite or aversion. In case of risk appetite, traders offload, leading to price fall, while risk aversion buying lifts the prices,” he added.
In London, gold prices rose nearly one per cent due to a fall in US stock markets, amid fears that the US might be heading for a recession, and concerns over the euro zone debt crisis. Spot gold was up 0.2 per cent at $1,887.89 an ounce at 0916 GMT, having earlier touched a high of $1,902.70 an ounce.
US employment growth came to a halt in August, reviving recession fears and piling pressure on both President Barack Obama and the Federal Reserve to provide more stimulus to aid the frail economy. The bleak outlook on the world's largest economy sent anxious investors to safe haven assets, including bullion.
While announcing the second quarter demand trend of gold, Marcus Grubb, managing director-investment at the World Gold Council, said, “The strength of demand in India and China, coupled with an overall drop in recycling activity this quarter, demonstrates that consumers have adjusted to the current price environment and expect the upward price trend to continue. In addition, ongoing macro economic uncertainty, the continued sovereign debt crisis and widespread inflationary pressures will result in gold demand remaining strong.”
Grubb had said the smaller countries like Vietnam and Turkey are looking to accumulate gold as an additional foreign currency asset. Turkey reportedly intensified gold imports in the recent past and added 17.143 tonnes in August, as compared to 10.456 tonnes in July.
More From This Section
China’s gold consuming neighbours like Indonesia, South Korea and Thailand, have a long and important relationship with the yellow metal, which we expect will be deepened by increased liberalisation and growing regional prosperity, he added. These small additions of gold accumulate to the overall rise in prices, said Thiagarajan.
Meanwhile, gold traders have also started preparations for jewellery making for their Christmas and New Year demand from the Western world. Generally, preparations for new jewellery designs begin three months ahead of the festival.