Gold prices set to touch Rs 20,000 per 10 gm by Diwali

Gold prices are all set to touch Rs 19,500-20,000 per 10 grams by Diwali due to rising investor interest, a top industry official said.

"We expect gold prices to cross Rs 19,500-Rs 20,000 per 10 grams by Diwali this year after some correction in prices," Bombay Bullion Associations (BBA) President Suresh Hundia told PTI here.

Standard gold (99.5 purity) closed at Rs 18,910 and pure gold (99.9 purity) at Rs 19,000 per 10 grams in the Mumbai bullion market last week.

In New York, gold for December delivery is hovering at $1,237.90 an ounce on the Comex division of the NYMEX.

Gold may reach at least $1,350 an ounce this year as investors seek a shield against financial turmoil, weak currencies and inflation, analysts said.

Indian households are the largest gold consumers in the world. India's bullion demand almost doubled in the first-half of the year, even as prices touched a record high in June.

The forthcoming festive season of Ganesh Chaturthi, Dusshera and Diwali may further fuel gold jewellery demand.

"Gold demand is expected to increase due to forthcoming festival seasons and wedding season," Hundia said.

Gold prices continue to appreciate in the international market, with prices touching multi-week highs in dollar and euro terms. This was due to concerns about the health of the global economy and double dip recession fears, which has made gold an attractive investment haven, Bonanza Commodity Brokers Senior Research Analyst Basant Vaid said.

Demand for gold in India rose by 94 per cent to 365 tonnes in H1, 2010, compared to 188.4 tonnes in H1, 2009, clearly indicating that there has been a rebound in demand. In value terms, India's gold demand grew from Rs 27,300 crore in H1, 2010, to Rs 60,500 crore in the corresponding period a year ago, an increase of 122 per cent.

"With the Indian marriage season coming up as well as important festivals like Dhanteras and Diwali, we anticipate gold demand will remain robust throughout 2010," World Gold Council Managing Director (Middle East and India) Ajay Mitra said.