WITH financial crisis deepening around the globe, investors are flocking to gold. This has kept the yellow metal price up while most other commodities headed southwards during the week. In spot market gold moved up 1.62% compared with the previous week and closed at $849 per ounce after making a high of $931. In futures, the October contract on Comex closed up over 3% at $859 after making a high at $924.
Locally on MCX the October contract closed up over 4% at Rs 13,372 per 10 grams after making a high at Rs 14,320. The local prices were supported due to the depreciation of rupee which fell by over 4% since past ten days to 48.3 levels against the dollar.
Due to the collapse of financial institutions throughout the world the liquidity crisis deepened and the rise in gold prices was due to its preference as a safe-haven asset.
However, later in the week, on October 10, gold price fell by over 9% to a low of $826 level reversing the gains made earlier the day as a wave of panic prompted the investors to sell assets across the board to meet liquidity need. The prices later recovered.
Subodh Gupta from Anand Rathi Commodities said going forward gold will follow global economic turmoil more than anything. "Looking at trend in gold prices $840 is a very critical support and a breach of this might see gold at $800 per ounce and on upside one can see gold at $900," he said.
Dollar tends to look stronger as compared to Euro and week as compared to yen. "It seems that for the time being gold has lost correlation with the currency markets," Mr Gupta added.
In the local markets demand has taken a backseat due to the high price and people are just selling to book the profits. But a research report from Angel Commodities expects the demand in India to pick up by Diwali.
nidhi.sharma@timesgroup.com
Locally on MCX the October contract closed up over 4% at Rs 13,372 per 10 grams after making a high at Rs 14,320. The local prices were supported due to the depreciation of rupee which fell by over 4% since past ten days to 48.3 levels against the dollar.
Due to the collapse of financial institutions throughout the world the liquidity crisis deepened and the rise in gold prices was due to its preference as a safe-haven asset.
However, later in the week, on October 10, gold price fell by over 9% to a low of $826 level reversing the gains made earlier the day as a wave of panic prompted the investors to sell assets across the board to meet liquidity need. The prices later recovered.
Subodh Gupta from Anand Rathi Commodities said going forward gold will follow global economic turmoil more than anything. "Looking at trend in gold prices $840 is a very critical support and a breach of this might see gold at $800 per ounce and on upside one can see gold at $900," he said.
Dollar tends to look stronger as compared to Euro and week as compared to yen. "It seems that for the time being gold has lost correlation with the currency markets," Mr Gupta added.
In the local markets demand has taken a backseat due to the high price and people are just selling to book the profits. But a research report from Angel Commodities expects the demand in India to pick up by Diwali.
nidhi.sharma@timesgroup.com
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