Gold prices hit three-month high on global cues

Gold prices zoomed to a three-month high Friday, crossing Rs.29,000 per 10 gram in major cities across the country on global cues, including escalating tensions in Iraq, a weak rupee and volatility in stock markets.

In the country's financial capital (Mumbai), standard gold (24 carat) touched Rs.29,170, as investors look at the yellow metal as a safe bet at a time when uncertainty grips financial and currency markets due to geo-political reasons.

Similarly, gold prices shot up to Rs.29,300 in Delhi, Rs.29,280 in Kolkata, Rs.29,250 in Bangalore and Rs.29,330 in Hyderabad, a level that was seen in the third week of May and an increase of Rs.300-500 from Thursday's closing rates.

The sudden rise in gold prices in the Indian sub-continent market has been attributed to a spurt in demand for the yellow metal in global markets such as Singapore and London bullion markets where the metal hit a high of $1,322.60 per ounce after the US launched air strikes in northern Iraq against the invading Islamic State (IS) forces.

With the festive season setting in later this month, traders said gold prices will sustain the upward momentum and cross the Rs.30,000-mark even before the wedding season begins next month.

Meanwhile, rupee touched a five-month low of Rs.61.70 per dollar earlier in the day, though it recovered a bit to end at Rs.61.61.

According to the World Gold Council, India became the second largest consumer of gold with 975 tonnes of the metal sold in 2013 as against 1,066 tonnes in China.