Gold touches Rs 11,360

Takes cues from firm global market as dollar weakens.

Standard gold hit an all-time high in the domestic market on Friday on strong global cues, as the buzz of aggressive rate cuts by the US Federal Reserve and weakening dollar lifted the metal closer to the $900-mark in London.

In Mumbai, standard gold hit Rs 11,360 per 10 grams while pure gold outperformed it to Rs 11,410 per 10 grams in the afternoon. The metal eased marginally at the day's end to Rs 11,355 for standard and Rs 11,405 for the pure variety.

The continued weakness in the dollar gives clear signals for an interest rate cut of 50 basis points by the US Federal Reserve in order to help bolster the ailing economy, believe experts.

Gold for immediate delivery was trading at $894.61 an ounce in London early on Friday but slipped to $889 in the afternoon on profit booking by major stockists.

In India, however, jewellers have started offering up to two per cent discount for scrap gold to ease selling pressure and boost demand for virgin jewellery.

"Scrap selling pressure is mounting as existing customers, a majority of them housewives, are selling gold to cash in on higher prices," said Suresh Hundia, president, Bombay Bullion Association (BBA).

"You cannot sell scrap gold on spot prices," he quipped.

Approximately 90 per cent of the total scrap sellers are housewives. The remaining 10 per cent are jewellers whose designs have become outdated or have bits and pieces. According to an estimate, jewellers in Mumbai alone purchase upto 80-100 kg of scrap gold as compared with 10-15 kg in normal circumstances.

There is no such thing as 'seconds' as the metal retains its value (aesthetic and price) despite recycling. Jewellery items made from recycled gold are sold on par with the ones made from virgin metal. Therefore, the secondary metal market has nothing to lose.

Used gold can be obtained in pure or standard forms after recycling. Therefore, jewellers are not hesitant of buying srap gold .

Traders, however, feel the record prices would not sustain and fall to $860 an ounce (Rs 10,500 per 10 grams) after hitting the psychological barrier of $925 (Rs 13,000 per 10 grams).