Gold perks up as stocks slide

With global economy showing no signs of a recovery, and with the stock markets in the doldrums, the eternally popular investment option, standard gold, breached all previous records and hit an all-time high of Rs 15,230 per 10 gm in Mumbai on Tuesday. Precious metals also followed suit, rising Rs 485 to close at Rs 15,295 per 10 gm in Mumbai's Zaveri Bazar.

The precious metal perked up 3.12 per cent or Rs 475, one of the biggest single day gains, following the firm trend in the global market. In London, the yellow metal zoomed past $960 in the early afternoon trade to see a high of $962.6 an oz. The metal gained 18 per cent in the last one month.

Now, gold traders and stockists have started estimating that gold could hit Rs 16,000 per 10 gm once, before falling on profit booking. Mehul Choksi, chairman of Gitanjali Gems joined a host of local traders to forecast gold prices to breach this historical high.

“Technically, gold is set to touch $975 which translates into Rs 16,000 per 10 gm considering rupee at the current level of 49.70 against dollar,” said Bhargav Vaidya, a bullion analyst with B N Vaidya & Associates. But, this level would not be sustainable on the possibility of profit booking, Vaidya added.

More than anything, it is the rupee which is making gold unaffordable as dollar is strengthening against the Indian currency, he quipped.

Surprisingly, trading in Mumbai's bullion market remained normal with a section of traders booking afresh on speculation that the gold may hit the roof. However, the other section abstained from any fresh booking but bought used gold anticipating it would fall, said Ashok Minawala, chairman, All India Gems & Jewellery Trade Federation.

The falling stock market and uncertainty over global economies have proved gold to be a safe haven and hence, traders have been posing confidence in the yellow metal. Importantly, the precious metal has proved its mettle. Jewellers and retail consumers have been buying intermittently for the metal's inherent use during the wedding season. The metal hit the record in Delhi spot bullion market too with standard and pure metal rising Rs 560 to Rs 15,420 and Rs 15,270 per 10 gm, respectively.

Gold futures on the Multi Commodity Exchange shot up 4 per cent with the metal for delivery in April set the high of Rs 15,319 per 10 gm before settling at Rs 15267 per 10 gm in early evening trade. The precious metal for October delivery, however, gained 3 per cent to Rs 15,128 per 10 gm.