Gold rises Rs 100

Gold prices shot up by Rs 100 to Rs 6,555 per 10 gram today in tune with the global markets.

Spot gold in London soared to its highest level since June 1988 at $458.55 an ounce, as uncertainty about the US economy, inflation concerns and robust physical demand sparked a buying sentiment, well supported by funds.

On the Multi Commodity Exchange (MCX), the October contract of gold closed higher at Rs 6,557.00, up from Rs 6,504.00 yesterday, with a volume and open interest of 6370 kg and 10488 kg, respectively.

"Gold prices are perking up and heading towards $525 per ounce in the international markets," Prithviraj Kothari, director of Riddhi Siddhi Bullion and a member of the Mumbai Bullion Association, said.

"The conditions are favourable. Crude oil prices are scaling new highs every day. The people in India have been investing in gold uninterruptedly. So, gold prices are bound to move up," Kothari said, adding he expected the prices to touch Rs 7,000 as early as November.

Harmesh Arora, vice-president of the Mumbai Bullion Association and head of NIBR Bullion, said prices were well supported by speculative and psychological buying.

A surge in the euro in comparison with the dollar has also helped in boosting gold-buying in gold-consuming countries. Besides, gold prices have also moved up with the rise in the international crude oil prices.

Currently, gold prices stand at around $449 per ounce in international markets. Once the prices crossed the benchmark price of $452, they might touch the $500-per-ounce barrier, he said.

"The demand for gold in the domestic market will increase when the marriage season approaches, which happens by November. So, gold prices are expected to break all previous records when the seasonal demand starts," Arora said.

SK Jain, member of All India Sarafa Association and president of Chandani Chowk Jewellers' Association, is also hopeful.

He said looking at the kind of investments people were making (275 tonnes of gold bought in the last quarter), the Rs 7,000-per-10 gm benchmark looked quite achievable. However, the price might touch this psychological barrier only at the start of December, and not before, he added.