Gold, silver hit new highs as global rates firm up

Prices of India spot gold and silver closed at all-time highs on Tuesday, in line with the firm trend in the global markets, where buying by hedge funds is keeping prices high. The opening rates of both the metals were also at all-time highs.

Gold of .999 purity closed at Rs 8,210 per 10 gm, up 1.23 per cent from Monday's close. It also opened stronger at Rs 8,190 per 10 grams, up 0.98 per cent from yesterday's close. Standard gold (.995 variety) closed at Rs 8,170 per 10 gm, also up 1.23 per cent. This variety had opened stronger at Rs 8,150 per 10 gm, up 0.99 per cent from the previous close.

Spot silver closed at silver Rs 13,400 per kg, up 0.82 per cent from Monday's close. It had opened a little lower at Rs 13,350 per kg, up 0.45 per cent from the previous close.

Overseas hedge funds are on a buying spree and they will continue to invest in gold as the sentiment for the yellow metal and precious metal complex in general is strong, a Mumbai-based trader said.

"Gold of .995 variety has the capacity to touch Rs 8,500 per 10 gm within a fortnight," said Harmesh Arora, vice-president, Bombay Bullion Association.

"Geopolitical tensions (in the Middle East and the Iran nuclear issue) and soaring crude oil prices are the main triggers for this uptrend," said a bullion dealer with a private sector bank.

At 1255 IST, March crude oil futures on the New York Mercantile Exchange (in the online Access Asian trade) was at $68.37 a barrel, unchanged from the previous close.

"Every dip in the gold prices would be a good opportunity to buy," said Si Kannan, analyst with ShareKhan Commodities.

The greenback and gold move in opposite directions. "Physical demand for the yellow metal has reduced considerably," said the private bank dealer. "The buying power of the rupee has come down drastically," he said, adding, "silver is stronger than gold."

Reports that Barclays has applied for silver exchange traded funds (ETF), positive environment of gold, and the firm base metal prices are aiding the uptrend in the white metal prices.

Silver is being increasingly eyed for industrial purposes rather than investment demand, said traders.

"Demand is mainly coming from China," said Rabindra Bharti, a bullion dealer with a state-owned bank.

However, physical demand for the white metal in India is very low, said Bharti. At 1258 IST, spot overseas silver was at $9.91 an ounce, up 0.71 per cent.