Speculators add sheen to gold

Market expects prices to touch $670 level. Primarily speculative buying "� and to some extent by fund buying "� today spurred gold by Rs 30 in the domestic market. While standard gold settled at Rs 9,390 per 10 gm, pure gold closed at Rs 9,435 per 10 gm.

"The present buying is purely speculative in nature, as players want to take the prices up to the $670 level, at which they would like to book profits, culminating in a price crash," said Bhargav Vaidya of B N Vaidya & Associates.

However, impact was not much on Mumbai markets, as these tend to watch the global trend for at least a couple of days, Vaidya added.

The yellow metal, the safe heaven for global speculators, remained volatile amid strong buying sentiment and profit-bookings at higher levels.

On Monday, standard gold touched the Rs 9,400 per 10 gm level, primarily taking a cue from fresh profit-takings by a section of traders in London.

"Currently, there is no domestic demand, and the demand for the next wedding season will arise only after Holi.

However, the local market "� barring a few exceptions "� is surely going to toe the international market line," said Prithviraj Kothari of Riddhi Siddhi Bullion.

Globally, in early London trade, gold rallied from the opening level of $655.50 an ounce to a high of $659.50, as funds were the noteworthy buyers early on. Speculators turned net sellers at the day's high point, putting an end to the rally and pushing the metal down to a lower level.

The yellow metal's recent run has been helped by hardening oil prices "� currently near the $60 a barrel level "� and a slightly weaker dollar. The trend is for $673 on the upside and a support level of $650 at the bottom.

"The overall sentiment towards the precious metal remains bullish despite a slowdown in US economies," Kothari said. However, amid the rally, some experts foresee a bearish phase in the near term.

Gold also shone in New York today, as crude oil held firm, but traders said the yellow metal faces strong resistance at last week's six-month high of $661.50. In New York, spot gold rose to 655.50 an ounce in early trade, from 653.90 late yesterday.

Gold gained in Singapore as well, on a weaker dollar and firm crude oil prices, but traders said the yellow metal would have to crack last week's highs to keep the uptrend going.

Late cold weather in the US spurred the demand for heating oil, which has led to a dramatic increase in the prices of crude oil. Experts believe oil prices will continue to remain firm in the future. Concerns over higher (oil) demand and inventory rule high, as below normal temperatures remain supportive to higher oil prices.

Bloomberg adds: UBS AG, Europe's biggest bank by assets, expects gold to climb to $700 in the next three months.

The forecast was raised from $650 because of "firm underlying retail demand for gold jewellery,'' John Reade, head of metals strategy at the UBS Investment Bank unit in London said in an e-mailed report today. Investors are also ``very positive for gold's prospects.''

Gold for immediate delivery was little changed at $653.05 an ounce at 12:39 p.m. in London. The estimate for the next month was raised to $650 from $630, signaling ``near term downside risk,'' UBS said.

Silver will rise to $13.50 in one month, up from a previous forecast of $13, and $14.50 in three months, up from $13.75, UBS said. ``There is less of a fundamental story behind the move in silver, simply sympathetic investor buying,'' UBS said. Silver is now about $13.60 an ounce.

The one-month platinum forecast was raised to $1,170 from $1,140 and three-month forecast to $1,225 from $1,180. Palladium forecasts were unchanged at $335 in one month and $350 in three months.