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| Gold hits new high at Rs 16,240/10 gm |
| BS Reporter / Mumbai Nov 04, 2009, 00:48 IST |
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 The yellow metal rose Rs 155 on the announcement of RBI’s asset purchase, weak dollar.
Gold touched a new record in rupee terms today, after the Reserve Bank of India’s (RBI’s) announcement that the central bank had added 200 tonnes to its existing reserves of 357 tonnes. A weak dollar overseas also boosted the metal’s appeal as a safe-haven investment at a time of economic crisis.
Standard gold (99.5 purity) today opened at a new peak of Rs 16,240 per 10 gm, a rise of Rs 155 or 1 per cent from Rs 16,085 per 10 gm. Then followed pure gold (99.9 purity) to resume trade at a historic high of Rs 16,325 per 10 gm as against Rs 16165 per 10 gm the previous day.
The metal failed to sustain this level, as the dollar strengthened against major global currencies. In late evening trade, gold at Zaveri Bazar slipped Rs 15-20 per 10gm on global cues.
Meanwhile, from 1.47 against the dollar, the euro slipped to 1.35. Towards the evening, the rupee weakened to 47.40 from 47.02 against the dollar in the morning.
This indicates the price will decline in the near future, said Bhargav Vaidya, an analyst with B N Vaidya & Associates.
India, the world’s largest consumer of gold, has gradually realised the importance of gold reserves due to spiraling prices over the years. So far, the country’s gold consumption was banking purely on retail purchases. But, since the central bank has stepped in, the overall consumption is expected to rise further.
According to an estimate, retail consumers in the country hold about 25,000 tonnes of gold.
In dollar terms, however, gold perked up by $1,066.15 an oz in early trade, a rise of $4.10 from the previous day’s close in New York. Later, the metal slipped to $1062.10 in afternoon trade.
“RBI’s move to build gold inventory is a strong signal towards the significance of the yellow metal. Earlier, the central bank was keen on building reserves in currencies.
But part-diversification is a symbolic move which was realised now,” said Ajay Mitra, MD, Indian subcontinent, World Gold Council.
Current foreign exchange reserves at the central bank worth $285.5 billion, of which gold comprised just over $10 billion.
The latest purchase will lift its share of gold holdings from near four per cent to about six per cent, much less than most of the developed world, but four times that of China’s.
Gold’s all-time high level of $1,070 an oz, which the metal had hit on October 14, is now in sight. On breaching this level, the precious metal can hit $1,085 and is even seen to cross $1,100 an oz in the medium term, a precious metals analyst said.
The most-traded December contract on the Multi Commodity Exchange was up by 1.2 per cent at Rs 16,310 per 10 grams, the all-time high record of the precious metal on the futures platform.
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