Gold price hits record Rs 7,210

Speculative buying lifts gold price by Rs 120 per 10 gm across all categories.

Precious metals are gradually moving beyond the reach of common people with their prices hitting new records on every coming business day. Speculative and fund-based buying today lifted gold price by Rs 120 per 10 gm across all categories.

Following the hike, the yellow metal is quoted at Rs 7,175 per 10 gm (99.5) and Rs 7,210 per 10 gm (99.9) in the physical market.

"Gold prices in the domestic market are mainly dictated by movement in the international market, as domestic consumption slowed down," said Prithviraj Kotheri, director of Riddhi Siddhi Bullion, and member of Mumbai Bullion Association.

The most recognised precious metal in the investment community has perked up by $15 per ounce in the international market owing to riding demand from across the board, globally. Thus, in the rupee term, gold prices have jumped by Rs 200 per 10 gm in the last two days - surprisingly.

"Those, who were not interested in gold a few years ago, have suddenly started flooding the market with money, exploiting all their reserves, as they have begun to look at the metal as one of the fastest profit-making investment options," Kotheri said. He added that today nobody is interested in selling gold, as everyone is expecting further hikes in gold prices in the days ahead.

On scrap gold being pumped into the market by consumers, Kothari said the total gold collection by banks could be around 20-30 kg per day.

Taking into account consumption of about 25 tonne per day, the collection looks minute. Hence, scrap gold collection is not going to make any impact on the overall price uptrend, he felt.

Kotheri projected the gold price to touch $502 an ounce on a technical basis, while in the rupee term the price is expected to touch Rs 7,400 per 10 gm by December, as good demand was witnessed at Rs 6,800 per 10 gm during Diwali.

He, however, cautioned all optimist traders that once the price starts looking down, it may see the bottom of Rs 6,500 per 10 gm, and this is likely to happen by January.

Kotheri further said since the marriage season in India is starting now and would continue till March next year, the demand for gold would continue at least till March 2006. But with the dollar strengthening, the price may slide at least for a limited time.

In India, gold consumption has declined 50 per cent, and imports, too, have slumped drastically. Importers float orders intermittently due to the lack of demand from direct consumers, Kotheri said.

Harmesh Arora, NIBR Bullion head and vice-president of Mumbai Bullion Association, was upbeat about gold prices.

He said Arabian countries are the new entrants to gold market. Buyers from Japan, Korea, the US, Russia and south Arabian countries have increased their activities; they want to invest whatever they earned on crude.

Therefore, price hikes would continue till gold touches the benchmark price of $490 per ounce in the international market and Rs 7,300 in the domestic market, which is projected to touch anytime this fortnight.

Arora cautioned the precious metal might have a downward movement, and correction could be in the region of 4-5 per cent.

Reuters adds: Global demand for gold in the third quarter totaled 838 tonne, a rise of 7 per cent from the year-ago quarter, as surging investment demand helped offset a slowdown in usage from the jewellry sector amid higher metal prices, the World Gold Council (WGC) said.

But gold demand was outpaced in the quarter by overall supply coming into the market from mines and old scrap, which totaled 920 tonne, the industry-backed group said.

Worldwide jewellry demand in the third quarter edged up 2 per cent to 613 tonne, after headier growth of 20 per cent in the first quarter and 15 per cent in the second, WGC said.

George Milling-Stanley, WGC's manager investment & market intelligence, said jewellry consumers, particularly in top-user India, may have been deterred by both gold's price volatility and the higher absolute values seen during the latest quarter.

The price of gold climbed from about $425 an ounce at the start of July 2005 to $466 by late September, which, at the time, was its highest in almost 18 years.

It has since crept toward $480, a level not seen since January 1988, boosted by concerns about inflation and heightened geopolitical uncertainty.