Yellow metal soars on oil spike, terror threat

Higher oil prices coupled with increasing terror threats across the world pushed standard gold price up by Rs 80 to Rs 9,770 per 10 gm in the Zaveri Bazar in Mumbai on Thursday.

Pure gold also moved in tandem and gained Rs 80 to Rs 9,820. The yellow metal failed to breach its six-week high in early Thursday trade due to bargain hunting and profit-takers making a series of offloading in London and New York.

The market was looking to fall further but a drop in dollar spurred some investors to add position amid fear of further price rise in the global market.

Indian analysts are still unsure as Bhargav Vaidya, analyst with gold trading firm B N Vaidya & Associates, said that if the euro and yen strengthen, the gold price would further go up and cross $700 in the international market.

However, he denied the current rise as a consequence of terrorist attack in Mumbai on Tuesday. Despite being the biggest consumer of gold, India has been a discounted country so far as far as price setting goes, he added.

The American investors remained upbeat with flowing fresh funds in gold. In its daily report, Standard Chartered Bank said, "With the resistances in the $650-$655 band seemingly stubborn given gold's failure to hold on to gains on Wednesday, the recent surge in prices could come under some corrective pressure, once the immediate reaction to the security worries wanes."

A section of traders was keen on booking profits in early trade on Thursday with remote fear of a price decline but they changed their view in the wake of an apprehensive price rise.

Gold had rebounded from a three-month low of $543 in mid-June after hitting a 26-year high of $730 in mid-May.