Gold breaches Rs 10,000

Ends at Rs 9,945 on profit booking; at 25-yr high of $685 in London

Riding on Iran nuclear tension, the upbeat mood in commodity trade, and rising jewellery demand standard gold in the domestic market breached the psychological Rs 10,000 per 10 gm on Friday.

However, profit booking pulled down the yellow metal to close at Rs 9,945. Pure gold ended the day higher at Rs 9,990 per 10 gm.

In the international market investor interest, alongwith firm oil prices and geopolitical worries perked gold prices to a new 25-year new high of $685 an ounce, just $15 short of the big target of $700.

Gold, however, is becoming increasingly vulnerable to correction as prices have gone beyond sustainable level but upbeat market sentiments prompted market players to buy more, traders said.

Despite higher prices, speculators and long-term players are continuously adding to their positions fearing a supply crunch.

Prices remained volatility as traders intended to correct their position before going on leave for the weekend, according to the Standard Bank, London.

Market players are also eagerly awaiting any direction in currency market ahead of the release of US April payrolls data which they believe may determine the next move of US traders.

Physical trade throughout the world remained sluggish due to higher prices and investors have started considering alternatives like real estates.

"Gold is supported by the upbeat mood in silver which is pushed through exchange traded fund (ETF). As long as ETF supports silver price, gold price will follow suit. Rather sentiment in the yellow metal would be more encouraging," said Bhargav Vaidya of B N Vaidya & Associates.

India is expecting 25-30 per cent growth in jewellery demand. Gold demand would grow in tandem, said Bakul Mehta, chairman, Gems & Jewellery Exports Promotion Council (GJEPC).

Meanwhile, the upward trend is expected to be a little controlled in the near future with the New York Mercantile Exchange's (NYMEX) decision to change margins for its gold and silver futures contracts.

Margins for the May, June, August, October, and December 2006 contracts will increase to $2,750 from $2,250 for clearing and non-clearing members and to $3,713 from $3,038 for customers. All other months will remain unchanged.

Similarly, margins for the May, June, July, and September 2006 silver futures contracts will increase to $6,000 from $4,500 for clearing and non-clearing members and to $8,100 from $6,075 for customers.