| Gold rallied in Mumbai on Friday after keeping low for two days to match global prices that hit record highs this week on South Africa supply concerns, US financial turmoil and a depreciating dollar. |
| Standard gold in Mumbai rose by Rs 105 to hit a fresh high of Rs 11,890 per 10 grams while pure gold surged by Rs 100 to touch Rs 11,940 per 10 grams. |
| Given the fact that the gold sales for stockists attract 1 per cent value addition tax (VAT), the price crosses the psychological barrier of Rs 12,050 per 10 grams for the first time in India. |
| In London, the yellow metal zoomed to $937 per ounce, a historic high, as speculative demand from traders, who are apprehensive of US economic recovery after the 50 basis point Fed cut on Thursday, drove the prices up. |
| "Investors are left with no option but to grab as much yellow metal as possible. Speculators are enthusiastic of huge returns in yellow metal as Gold Field Minerals Services (GFMS), the London-based research agency, has already projected the price to hit $1000 an ounce this year," said a local trader. |
| Meanwhile, scrap recovery in India has increased four-fold to about 80-100 kg per day compared with 15-20 kg per day when gold was hovering around $700 six months ago. |
| The massive increase in scrap selling, according to Ajay Mitra, MD, Indian sub-continent, World Gold Council (WGC), is because a group of customers, who have built their stocks through intermittent buying in the past, is booking profits and investing in real estate and bonds. |
| A second group of customers are exchanging old gold for new gold jewellery, offered by jewellers with no extra charge. |
| "The present price escalation in gold is purely driven by the economy. Hence, there is little chance that it could come down drastically, given that the fundamentals remain unchanged," Mitra added. |
| Gold rose by more than 30 per cent in 2007, its biggest annual gain since 1979. |
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