Gold futures on the Comex division of the New York Mercantile Exchange (Nymex) were up over 4 per cent as safe-haven buying continued for the past few days amid steep decline in global financial markets, said traders.
On the local bourses, the yellow metal was up by over 5 per cent, tracking the Comex, aided by a sharp fall in the rupee against the dollar.
India is the world’s largest importer of gold and a fall in the rupee makes gold dearer in the domestic market.
On Friday, the rupee hit an all-time record low of 49.30 to a dollar on continuous demand for dollars as banks bought the greenback expecting foreign institutional investors to sell shares. Demand from oil companies also hit the rupee.
“Gold is the only asset class where investors are putting their money as they have lost trust in all other asset classes,” said a dealer at an Ahmedabad-based private bullion importer.
On Friday, most share markets in the world were down 8-10 per cent on panic selling, triggered by financial crisis among the world’s leading banks in Europe, and the US.
More From This Section
“A weakening of the dollar after initial firmness against the euro also fuelled investment buying in gold,” said a Mumbai-based analyst.
Investment demand for gold is reflected in holding by the world’s largest gold exchange-traded fund, SPDR Gold Trust.
SPDR’s gold holding touched a record high of 765.74 tonnes as on Thursday, a whopping 150-tonne rise over the past three weeks.
Gold holding in India’s five gold ETFs is also reported to have gone up in September. However, the exact data for the same are s yet to be updated.
The average return on five gold ETFs in India is estimated to be above 8 per cent for the week ended Wednesday.