In the local bullion market, standard gold jumped Rs 310 while pure gold followed suit to close at Rs 12,280 per 10 gram. Although the yellow metal recorded a weekly gain of only Rs 280, yet it changed the market sentiment as participants have started considering gold again as a safe haven for investment.
However, gold took a beating in London on Friday afternoon when its price surged $20 on weakening dollar and fresh fund buying from traders, who anticipated de-hedging from this sector coming to an end.
In London, the precious metal hit $900 an ounce (oz), the highest since April 24. Gold for delivery in June drifted up to $900.20 in early Friday trade at the COMEX division of the New York Mercantile Exchange (NYME).
A part of the oil fund is also being diverted towards gold as crude oil has hit a fresh high and traders have started taking a cautious approach from the level towards the energy sector. Therefore, the current spurt may indicate the beginning of a bull run in the yellow metal, said an analyst with a leading research house.
According to reports, gold hedging by mining companies fell 18 per cent to 22 million ounces in the first quarter of 2008. But, the average hedging of the yellow metal is forecast to decline to 10-12 million ounces for the full year.
A recent report by the World Gold Council (WGC) had said that sale of the yellow metal in India, the world's largest consuming market, has declined dramatically during the first four month of the current calendar year.
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Imports have slumped heavily and traders have adopted a "wait and watch" policy for fresh investments in gold. Consumers are also waiting for the prices to stabilize.
According to WGC, gold sales on the day of Akshaya Tritiya declined by 11 per cent to 49 tonnes this year against 55 tonnes on the same day last year.
However, sales in terms of value jumped 19 per cent because of a 33 per cent price rise during the year to Rs 12,000 per 10 gram from Rs 9,000 per 10 gram last year.
Behaviour of the consumers has changed from unbranded jewellery buying in past years to hallmarked jewellery this year.
Large and established players selling hallmarked gold jewellery have shown an upward growth in excess of 25 per cent while there has been a slight decline in volume terms for small family-run jewellers.