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The price of gold jumped Rs 200 to Rs 28,360 per 10g at Zaveri Bazaar in Mumbai on Thursday, against the official close of Rs 28,160 per 10g, after the European Central Bank (ECB) announcement of a euro 60-billion monthly bond-buying programme.
ECB will infuse $1.3 trillion in the system till September 2016. In London, gold witnessed a quick turnaround from its early loss of $5 to $1,288 an ounce to $1,300.3 immediately after the speech of ECB chief Mario Draghi.
Silver followed and rose Rs 400 to Rs 40,300 a kg in spot kerb trading here, following a $0.23 increase in its price in London to $18.34 an oz.
Kumar Jain, partner with Umedmal Tilokchand Zaveri, a bullion dealer and jewellery retailer in Zaveri Bazaar, said, “Bullion prices witnessed a sudden spurt after closing hours because of ECB's stimulus. The trend is likely to continue in the near future.”
Economic stimulus normally helps increase the disposable money with individuals, of which a portion goes into bullion. European fund managers are expected to be bigger buyers of gold in the coming months – the price in euros has risen 17 per cent in six months but in dollar terms has fallen 0.9 per cent.
Since the stimulus reflects worsening fundamentals of euro zone economies, gold will remain a safe haven for European investors.
Nic Brown, head of research at London-based Natixis Commodities, said: “The European bond market is now sinking into negative yield. A safe-haven asset such as gold that pays a relatively generous yield is becoming increasingly attractive for European asset managers.”
After the ECB announcement, gold prices jumped a little over Rs 300 in futures trade and were quoted at Rs 28,073 per 10g for the February contract on the Multi Commodity Exchange.
