Gold at record Rs 6,370

Bullion prices in the country hit the roof yesterday with spot gold (pure) touching a new all-time high of Rs 6,370 (10 grams) at close after trading at an intra-day high of Rs 6,420, backed by a strong rally in silver prices. Silver traded close to Rs 10,000 in intra-day trades before settling at Rs 9,835.

The price surge was triggered by strong world prices. Gold traded above $425 an ounce in international markets.

In the domestic futures market, gold volumes rose to all-time highs.

The MCX's cumulative volume of its four futures contracts in gold hit 171.400 kg, sharply up from Monday's 29.5 kg.

The NCDEX clocked a volume of 47.7 kg cumulatively in its three futures contracts of January, February and March, up from the previous day's 12.7 kg.

The MCX did not see any trading in silver. However, the NCDEX witnessed a volume of 1,475 kg, sharply up from Monday's 365 kg.

"This is the first time that gold and the stock market are heading in the same direction. Till now it was always inversely proportional. This implies a strong price trend in bullion in the near future," Jaideep Wairal, director at the Mumbai-based consultancy firm BullionIndia Inforservices and Consultancy, said.

Another first of its kind is the gold and silver price trends. Till date, silver moved up in sympathy with higher gold prices, but this time round the roles seem to have been reversed. "Gold seems to be rallying on the back of silver," Wairal said.

Meanwhile, Reuters reported that gold futures traded above $425 an ounce for the first time in more than 15 years in New York on Monday as investors diversified out of the crumbling dollar.

All precious metals surged on the first trading day of 2004, but only gold is considered a form of currency and thus a hard alternative to the sliding greenback.

Analysts said gold could touch $450 for the first time in 16 years because of dollar weakness, fears of fresh attacks on the United States, and the potential for a military and political quagmire in Iraq.