Gold rises ahead of Christmas fervour

Mirroring the buying sentiment in London and New York, gold bounced back in local bullion markets ahead of the Christmas holidays.

Although the late announcement of a bank holiday on Bakri Idd created confusion in the bullion market, traders who participated in activities today ended with a marginal profit as gold surged Rs 25 per 10 gram across all sectors.

Standard gold was quoted at Rs 10,285 per 10 grams and pure gold at Rs 10,315 per 10 grams, compared with Rs 10,260 per and Rs 10,290 yesterday, respectively.

Trading activities remained thin and scattered as a majority of leading shops remained closed in Zaveri Bazar.

The market is in a holiday mood, which will to continue upto January 15 - the day of Makar Sankranti which considered auspicious in the Hindu Solar Year.

Bhargav Vaidya, a bullion analyst, believes that stockist buying will resume only in the second half of January as the second leg of winter wedding season begins in February and continues till the first week of March. Till then, the yellow metal will remain under pressure with sentiment largely dominated by the movement in dollar and crude, he said.

Another bullion analyst, however, remained upbeat with the price of gold touching $820 by early January on fresh demand pouring in on current lows. "Hitting this barrier may see price touching $848 towards the end of next month," he added. A Christmas in the US may not stop traders buying in other parts of the world where the festival is not celebrated as much and, therefore, traders from Asia may find this a major buying opportunity to dominate the global precious metals market, the analyst said.

The Western markets will remain closed for three days early next week on account of Christmas and Boxing Day.

Meanwhile, gold extended a rebound in early European trade to touch $803.70 per ounce today.

High oil prices and a weak dollar versus all major currencies would continue to underpin gold, with wider economic uncertainty also supportive for the precious metal. Experts believe that the catalysts for expectations of slower US growth have the potential to drive prices to fresh highs.

Gold spiked to $845.40 in early November, its highest since 1980, as investors, worried about financial instability and the credit market freeze, bought the metal for its perceived 'safe haven' properties.

On MCX, gold futures for delivery in February closed with a gain of 0.38 per cent at Rs 10,271 per 10 grams as against Rs 10,232 per 10 grams yesterday.

Contracts for long months also closed with a gain of 0.39 per cent (October) at Rs 10,500 per 10 grams as against Rs 10,462 per 10 grams on better buying sentiment ahead.