Quoted at $980.3 an ounce (oz) in early afternoon trade, standard gold closed in Mumbai's Zaveri Bazar at Rs 13,680 per 10 gram, a rise of Rs 370 from the previous close. Similarly, pure gold closed with a similar gain at Rs 13,730 per 10 gram. Dollar is currently trading at 43.23 against rupee, a rise of about 110 per cent since the peak of gold price early this year.
"Inherently, gold has proved as a safeguarding pill in case of global financial crisis. At this level, however, profit booking is imminent. Therefore, there is the possibility of a correction in price," said Prithviraj Kothari, Director of Riddhi Siddhi Bullion. According to an analyst, a further rise in the prices of gold is inevitable as tension between Israel and Iran is mounting.
Speculation is rife that Israel may attack Iran, leading to disruption in Persian Gulf petroleum shipments. This may result in oil reaching a new high.
The meltdown in the global financial sector continues to highlight one of gold's greatest attributes as the safe haven for investment. The yellow metal is referred to as the only money that is no one's liability.
"Gold continued to remain as the portfolio diversifier as the metal has offered a return of 14 per cent this year so far against 42 per cent negative return offered by Nifty. Other asset classes have offered negative return in the last year. Commodities like crude oil and other means of energy are trading near lifetime highs. Hence, funds are diverted towards gold," said Harish Galipelli, Research Head of Karvy Komtrade.
