Gold touches three-month high on global cues

Depreciating rupee helped gold's rise in local currency

The price of gold jumped 1.8 per cent at Zaveri Bazaar here on Friday, following a strong upward trend in global markets. A depreciating rupee helped gold’s rise in the local currency.

Standard gold opened strong on Friday but profit booking pulled bullion down towards the end of the day. Still, gold ended on Friday at Rs 27,110 per 10g, a gain of Rs 490 from Thursday. The rupee fall helped; it closed at 65.83 against the dollar on Friday as compared to 65.55 on Thursday.

“Overall, gold is looking firm, which might support the metal touching Rs 27,700 (for 10g) in a month from now. In dollar terms, the price might see $1,185 an oz before taking a break on profit booking,” said Kumar Jain, Director, Umedmal Tilokchand Zaveri, a bullion dealer.

 

In London, gold shot up sharply on Thursday amid uncertainty in other asset classes. China’s factory output reporting a multi-year low seems to have refocused investors’ interest in bullion. The economic data is focused on the primary manufacturing index. So far, Japan and China’s have come in lower than expected at 51.9 and 47.1, respectively.

Also, the US Federal Reserve, in its latest minutes of the Federal Open Market Committee meeting, hinted the interest rate revision decision might extend beyond September, opposite to earlier indications. So, investors are pulling out their funds from other asset classes, including energy and metals, to park in bullion, considering it the safest bet against inflation and economic uncertainty.

On Thursday, gold rose $18 to $1,152 an oz after touching a high of $1,162 an oz in London. Traders said it might jump further next week. Silver followed suit and ended on Friday at Rs 36,800 a kg, from Rs 36500 a kg on Thursday.