Gold price up Rs 300 on supply concerns

Standard gold rose to a lifetime high in Mumbai on Friday following similar record set by the yellow metal globally on mines closure in South Africa and a weak dollar.

Standard gold closed at Rs 11725 per 10 gram, a gain of Rs 300 from the previous day. Pure gold also followed suit to end the day at Rs 11,780, an increase of Rs 305 from Thursday. The precious metal had earlier set the record high of Rs 11,575 on January 14 this year.

In London, gold hit the high of $922 an ounce in early trade on Friday, when traders went on booking fresh ahead of the weekend amid supply fears from South Africa, the largest gold producer.

This is the longest rally in gold since at least the end of World War II. Chinese traders were also found keen on building inventories before they proceed on a long New Year leave in the first week of February.

In Singapore, gold for immediate delivery was traded at $918.17 an ounce, up 0.6 per cent, extending the gain beyond 31 per cent.

Three South African gold miners Gold Fields (GFI), Harmony (HAR) and AngloGold Ashanti (ANG) have stopped production at all of their local mines because of inadequate power supplies.

As a result, gold supplies from the country is likely to drop drastically, probably to the lowest in 84 years, according to an analyst with a local research house.

Last year, South Africa's gold production dropped to an 84-year low, registering a 7.5 per cent year-on-year decline, while global gold production fell to a ten-year low, when it declined 3 per cent year-on-year.

Traders said that the metal was being picked up as an alternative to cash, especially since AngloGold, Africa's largest gold producer, stopped production at all its mines in South Africa from on Friday morning. Gold Fields halted output late Thursday.