Global rally expected to stay on course

DOMESTIC REVIEW/BULLION

The worldwide rally in bullion prices is expected to continue its upward march in the forthcoming week as the overseas markets resume after an extended weekend after new year holidays.

The price for standard gold in the spot market zoomed up to all time high of Rs 6210 and pure gold to Rs 6250 last week. The global rally pushed up domestic gold prices to record highs.

However, slight decline in international prices led to paring of gains. Standard gold closed at Rs 6205 and pure gold at Rs 62405 on Friday.

Despite intra-week loss, both standard and pure gold posted gains over previous Friday's Rs 6165 and Rs 6205, respectively.

Silver traded the gold line and zoomed up to Rs 9580 per kilogram, before closing at Rs 9545. This is sharply up from previous Friday's Rs 9325.

The gold futures markets moved the same way, with National Multi Commodity Exchange (NMCE) January contract being done at Rs 6272 with a volume of 3 contracts.

January contract positions were shifted to February futures that closed at Rs 6272 from last Friday's Rs 6153.

February gold futures rose marginally from Rs 6155 to Rs 6275 during last week. March futures gained from Rs 6170 to Rs 6252. April contract was last traded on 31 December at Rs 6270.

On Multi Commodity Exchange (MCX), February gold futures rose from last Friday's Rs 6160 to January 1 close of Rs 6247. Gold February mini futures strengthened from Rs 6065 to Rs 6100.

Other gold contracts in April witnessed sporadic trading and there was no trading in August contract. Silver January futures gained from Rs 8960 to Rs 9280 on Wednesday. There was no trading in the contract thursday.

On the National Commodity and Derivatives Exchange (NCDEX), January gold futures (maturing on 20th) traded last at 6225 from previous Friday's 6122, February futures closed at Rs 6243 and March futures closed at Rs 6236, both up from their previous Friday's close of Rs 6140 and Rs 6160, respectively.

According to Financial Times report, gold edged back from near 14-year highs on Friday morning in London as investors opted to settle balances in the absence of fresh direction from the Tokyo and US markets, which are both closed for extended holidays.

Bullion traded at $415.75/$416.25 by mid-morning in London, and was fixed at $415.20. On Wednesday, the precious metal closed the year at $417.25, a fraction below the highest levels since February 1990.

Over the year, gold rose 20 per cent for the second year running as the weakness of the dollar attracted buyers to what is seen as a safe haven.

Dollar weakness makes gold cheaper for holders of other currencies. The dollar sank 17 per cent against the euro and more than 10 per cent versus the yen last year.

Gold has risen almost 70 per cent since reaching its 20-year low of $251 per ounce in August 1999, a period when the metal was shunned and unfashionable beside the then sought-after technology and internet stocks.

Other precious metals were also trading close to multi-year highs. Silver, that gained 25 per cent and hit $6 for the first time since May 1998 in 2003, was unchanged at $5.97/$5.99.

Platinum, which has doubled in value since October 2001, was 50 cents below Wednesday's closing level of $815.

On December 18 it hit a 23-year high of $858 as the booming Chinese economy sucked in imports of the metal for the jewellery trade and the auto sector.