Dollar’s weakness pushes prices over $1,000 per oz in London.
Gold touched a new peak in the domestic markets on Tuesday in tune with global cues over simmering economic worries. Long term inflation concerns too prompted funds to opt for the yellow metal as a safe haven.
Both, standard gold (99.5 per cent purity) and pure gold (99.9 per cent purity) hit life time highs of Rs 15,875 per 10 gm and Rs 15,950 per 10 gm, an increase of Rs 135 or 0.85 per cent from previous day. In New Delhi too, the precious metal touched the new peak of Rs 16,200 per 10 gm despite investors abstaining from fresh buying due to the onset of inauspicious fortnight of “shraddha paksha” according to Hindu mythology.
The record price in India was chiefly supported by the metal passing the psychological barrier of $1,000 an ounce, the highest in six month, in early London trade on Tuesday where threats of prolonged economic weakness prompted investors to move funds into gold.
Spot gold rose to $1,007.45 an ounce, its highest since March 2008, when bullion touched a record high of $1,030.80. But, the metal fell marginally to trade at $1,004.65 an ounce later afternoon in London in comparison to $993.85 an ounce late in New York on Monday.
US gold futures for December delivery rose to $1,009.4 an ounce, before easing to $1,006.80 an ounce on Monday as compared to it’s previous close at $996.70 an ounce before the US long weekend.
Jewellery accounts for about 70 per cent of gold demand, according to the World Gold Council, and India is the world’s largest jewellery market by volume. When gold hit an all-time high 18 months ago, consumers abstained away from gold and shifted to other investment avenues, said an analyst.
It’s perennial opposite — dollar — slipped to its lowest in a year against a basket of major currencies as gold rallied with traders citing talks of reserve diversification into gold undermining the US currency. Against the Rupee, dollar slipped to 48.48 level on Tuesday from the peak level of 48.75 on Monday.
“This price level is not sustainable,” said Bhargav Vaidya, an analyst with B N Vaidya & Associates, a Mumbai-based research firm. We are looking at the metal declining to $990 and then to $960 in the near term and a range of $890-910, the level it had taken off from, in the foreseeable future, Vaidya added.
According to market sources, gold stockists are booking small quantities in preparation for meeting the festival demand during Dussera and Diwali. Jewellery exporters are also buying need-based quantitIes to meet their daily demand in anticipation of a price fall.
Retail customers, in contrast, have placed huge orders with local jewellers for marriages and festival seasons beginning September 18.
Since local jewellers take at least 15 days for making jewellery, consumers are placing orders to meet the delivery deadline in the third week of September.
Meanwhile, higher oil prices are also fuelling gold. Crude oil rose over $69 a barrel ahead of an OPEC meeting, which analysts believe may see more rhetoric on compliance but no change in output targets.
On the MCX, gold for October delivery rose 0.64 per cent to Rs 15,827 per 10 gm on Tuesday after hitting an all-time high of Rs 15,885 per 10 gm.
Silver for delivery in November also hit a lifetime high at Rs 26,998 per kg on Tuesday but eased later in the evening to trade at Rs 26,836 per kg, a rise of 1.96 per cent from the previous day.
