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| Gold prices hit another record | |
| BS Reporter / Mumbai November 12, 2009, 0:34 IST | |
The metal may see a correction soon on persistent selling by institutional investors.
.jpg) Gold rose by 1 per cent to an all-time high of Rs 16,790 per 10 gm in Mumbai’s Zaveri Bazar on Wednesday, on developments abroad where the precious metal breached the $1,117.33 an ounce mark.
Gold prices have been continuously rising amid speculation that US policies will weaken the dollar, thereby, boosting the metal’s appeal as an alternative investment avenue. The metal also gets favourable policies from global economies — India bought 200 tonnes of gold, Sri Lanka announced diversification of its reserve in favour of the yellow metal and Vietnam allowed import after 18 months of suspension.
Since the interest rate in US treasuries remain unattractive, as the Federal Reserve has kept its benchmark interest rate at close to zero per cent since December to pull the economy out of recession., gold remains the only profit multiplier option for funds. Traders now feel the yellow metal will breach the crucial Rs 17,000 per 10 gm mark for a short term and then slip back, as it has been overbought everywhere. In dollar terms, however, analysts forecast the metal to breach the $1,124 stop-loss level and then slip between $1,070-1,080.
“Buyers remained absent from active participation, as they expect an imminent correction,” said Ketan Shroff, partner, Pushpak Bullions Pvt Ltd, a Mumbai-based trader.
The dollar, a major determinant of gold’s movement, tumbled to a 15-month low against major global currencies and closed at 46.30 against the rupee after opening at 46.58 on Wednesday. The yellow metal is likely to see a correction soon, though, on persistent selling by institutional investors and continuous buying by retail investors. Generally, gold falls in this scenario, said Bhargav Vaidya, an analyst with B N Vaidya & Associates. In Delhi, too, gold hit a record high of Rs 16,980 per 10 gm, a rise of Rs 105 from the previous day.
Gold futures for December delivery rose by $1.10, or 0.1 per cent, to $1,102.50 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday. The metal’s six per cent rally this month was the longest since a seven-session, 4.7 per cent surge that ended on September 28, 2006.
Meanwhile, the World Gold Council (WGC) has said it will promote the metal’s industrial use, which may push prices further up to the level US investment bank Goldman Sachs had forecast, to between $1,150-1,200 an oz due to falling real interest rates and renewed buying interest by central banks.
Meanwhile, India’s gold import rose sharply in October, with the public sector MMTC alone buying 15 tonnes from abroad during the month, as against 10.42 tonnes in the corresponding month last year.
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