Gold sets fresh record on weak rupee

Yellow Metal Rises By Rs 475 To Rs 15,230; But Fresh Buying Comes To A Halt

THE depreciation of the Indian rupee and a strong upward movement in international gold prices pushed the yellow metal to a record high of Rs 15,230 per 10 gm in the spot market at Mumbai. Following the record high, fresh buying has come to a standstill with gold imports also taking a hit. Analysts expect the upward movement in gold prices to continue given the uncertainty in the global markets.
    With a fall in the equity prices across the globe and the erosion in value of other financial asset classes, investors are increasingly parking their money in gold. They are also investing more in gold Exchange Traded Funds (ETFs), which is providing a key support to international prices. Spot gold moved up by $21 in the London spot market to $962 an ounce level on Tuesday.
    On MCX, the most active April contract at 6.20 pm IST was trading at Rs 15,290 per 10 gm, up Rs 580 from the previous close. The open interest in this contract had gone up almost 10-fold from 2,200 on January 20 to 22,619 levels currently.
    A sharp 83 paise fall in the rupee against the dollar from Rs 48.83 to Rs 49.66 on Tuesday made gold more expensive because a large chunk of India's gold requirements are imported. According to KN Rahaman, deputy research head with Mumbai-based brokerage Way2Wealth, the stimulus packages being announced by governments is not boosting demand and people are liquidating their risky assets and switching to gold. "Active gold contract on MCX may touch the Rs 15,500-mark. If the dollar further strengthens, gold can touch Rs 15,700," he said.
    Naveen Mathur from Angel Commodities also felt that gold could touch the Rs 15,600-15,700-mark within a week. He said that there were unconfirmed reports that Russian and Japanese banks were buying gold, providing a major support to the prices.
    High gold prices has restricted imports and according to Bombay Bullion Association president Suresh Hundia, there is no demand despite the marriage season. "In January, India still imported 1,800 quintals of gold. But in February, so far there has been no imports," he added.
Silver too on a roll in
    tune with gold
MUMBAI: After taking a cue from gold, silver is too glittering never before, reports Our Bureau. On Tuesday, the price of spot silver (.999) breached the psychological mark of Rs 23,000 per kg to touch Rs 23,700 in Chennai. While in Mumbai the metal surged by Rs 705 to Rs 22,315 per kg in Mumbai, it jumped by Rs 500 to Rs 22,000 per kg in Kolkata. Thus the metal had gained more than Rs 4,000 per kg from January 16, when it settled at Rs 18,170 per kg in Mumbai market. A plunge in equity markets and firm global trend also boosted buying sentiment to some extent in domestic markets, dealers said.