The Hindu Business Line : Gold at all-time high

While early trade on Tuesday saw prices register Rs 6,495 per 10 gm, prices actually touched even higher last weekend when most markets were closed for Diwali.

The wholesale market in Mumbai witnessed transactions at Rs 6,500/10 gm on November 13 while retail prices in small towns touched a high of Rs 6,575/10 gm.

Gold prices in recent weeks have been strengthening for a host of reasons, with both supply and demand factors active.

High crude prices and the weakening US dollar are seen driving the market up, once again confirming the yellow metal's position as a safe investment. Besides, over the last 15 days, because of the fasting period of Ramzan, funds were not active as before, as a result of which supplies had somewhat tightened.

On November 15, gold rallied to a 16-year high of $440 an ounce, but agency reports from Singapore and Hong Kong said on Tuesday the prices fell to $436.25 an ounce.

Interestingly, the period of high international prices has coincided with a massive demand surge in India, caused by festivals and the marriage season.

"While it is usual for the gold market to face some demand compression when prices rise sharply, of late, the Indian market has displayed robust consumption demand, notwithstanding high prices," bullion analyst Mr Bhargava Vaidya told Business Line, adding that there could possibly be a small compression of about 10 per cent in demand, but it was too early to estimate.

Another interesting feature of the present condition is that recycling of gold in the local market is slowing down despite strong prices.

It shows investors are waiting to benefit from an anticipated further rise in price, experts pointed out.

In early trade on Tuesday, the European market was lower at $437/oz from the Monday high.

It is difficult to assert if the correction phase has set in, said Mr Vaidya.

More Stories on : Gold & Silver | Gold & Silver

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Price fall, higher input costs hit cement cos in southern region

i-flex acquires Equinox; to buy 33 pc stake in French firm

Gold at all-time high

Large vegoil imports a cause for concern

Govt looking at merger of PSU general insurance cos

ICICI Bank hikes deposit, lending rates

More freedom for co-operatives, says Manmohan