Gold closes in on Rs 10,000

In line with the global rally, domestic gold touched an all-time high of Rs 9,950 per 10 gms on Wednesday in intra-day in the New Delhi bullion market. Silver price too hit Rs 20,700 per kg.

Standard gold at Jhaveri Bazar in Mumbai closed on Wednesday at Rs 9850 per 10 gm while pure gold ended the day at Rs 9950 per 10 gm.

Gold tags have climbed 16 per cent since April 1 when standard gold and pure gold were quoted at Rs 8,455 and Rs 8,500 per 10 gm, respectively. A section of analysts believe that the yellow metal will touch Rs 10,000-mark this week itself.

August futures on the Multi Commodity Exchange (MCX) have hit Rs 10,116 and closed at Rs 10,074 per 10 gm.

Overseas spot gold rose to a new 25-year high of $679 a troy ounce as London AM price was fixed at $675.25 a troy ounce, up $17.5. Silver spot prices touched a new 24-yehigh of $14.52 a troy ounce as crude oil touched $74.99 a barrel on Nymex.

Crude price is now trudging towards the $75-a-barrel level over tight fundamentals and concerns over Iran and Nigeria running high. At 1900 IST, crude traded at $74.55 a barrel on the Nymex, down 0.25 per cent from the day's high, ahead of US inventory data. US inflation woes and good Indian demand are also driving the prices higher.

"Given the sharp moves higher over the past few days, the market may be in need of a consolidation. Nevertheless, with key factors supporting the rally largely in place and optimism among the speculative community still strong, we see further gains ahead and the next important round number of $700 (a troy ounce) is looking achievable over a few months," said a Barclays Capital analyst.

While there is still the risk sharp falls if market players liquidate part of their substantial long positions, tensions in the geopolitical environment and the potential for further dollar weakness are expected to continue to provide support.

"Also any price weakness is likely to be seen as good buying opportunities by speculators with tensions over Iran expected to escalate," said V Sivaramakrishnan, executive director with Dubai-based Kombench DMCC.

Prithviraj Kothari, director, Riddhi Siddhi Bullion and member of Mumbai Bullion Association, is of the opinion that the yellow metal would touch the Rs 10,200 per 10 gm by the end of this week and see a small correction.

Gold prices are silver driven, said Bhargav Vaidya of B N Vaidya and Associates. "This is an opportune moment for gold to set a record in the domestic market which we believe will happen this week," Vaidya said.

Following spiralling prices and phenomenal volatility, gold and silver domestic demand for fresh sale has been hit by about 25 per cent. "Six months ago, if on an average banks were importing gold worth $40-50 million daily, the figure is now $1.5-2 million," said T Gnansekar, a Mumbai-based independent analyst.

Demand was hit adversely on Wednesday as prices rose to new highs. However, it is expected to pick up again, though at slower pace, said Bhargav Vaidya, another independent analyst.