Gold jumps to highest in five months on safe haven buying

Standard gold jumped by 0.65% or Rs 175 on Thursday to trade at Rs 27,115 per 10 gm

The price of gold hit the highest in five months at Zaveri Bazaar here on Thursday, on safe haven buying in international markets.

Standard gold jumped by 0.65 per cent, or Rs 175, on Thursday to trade at Rs 27,115 per 10 gm.

“There is no physical buying today as traders expect gold to decline from the current level,” said Kumar Jain, director, Umedmal Tilokchand Zaveri, a bullion dealer and jewellery retailer. “Physical traders have stayed away from the current rally, unlike in the past when consumers used to book heavily when prices firmed up,” he added.

“Once, the Reserve Bank of India fixes the gold bond price for the current lot, the price of gold will decline,” Jain said.

In global markets, too, gold moved up to trade near the technical resistance of $1,150 an oz. Spot gold prices are trading higher by 0.4 per cent today at $1,149.9 an oz in late afternoon trade in London. On the benchmark Multi Commodity Exchange, gold is trading flat at Rs 27,187 per 10 gm.

Gold stabilised near a three-month high in global markets after the US services sector activity slowed to a near two-year low in January.

“The slow growth in the US services sector raises the safe haven status of the yellow metal. The lower probability of a US interest rate hike adds fuel to the rally in gold prices,” said Prathamesh Mallya, senior research analyst (non-agro commodities and currency), Angel Commodities Broking.

Silver also hit almost a three-month high to trade currently at Rs 35,940 a kg, a level not seen since November 9. In London silver was trading higher at $14.61 an oz.

Meanwhile, trade sources believe that traders take speculative position in gold when the government announces gold bond scheme for investors.

"Once, the Reserve Bank of India (RBI) fixes gold bond price for the current lot, gold price would decline,' said Jain.

Meanwhile, WTI oil prices are traded higher today by 1.3 per cent at $32.69 per barrel, while MCX oil prices are trading higher by 2.3 per cent at Rs 2,220 per barrel. Gains were seen after comments from Russia's foreign minister, Sergei Lavrov, who said the major producer would be willing to meet to discuss reducing oil output if there is consensus between members of the Organisation of the Petroleum Exporting Council (OPEC) and non-OPEC members to meet.