Festival demand and weakening dollar help the metal make spectacular gains.
Gold rose to a record high in Mumbai on overseas guidance as rising oil prices and a weak dollar bolstered the yellow metal to a new all-time peak on Tuesday.
In Mumbai, standard gold touched a high of Rs 16,120 per 10 gm, a rise of Rs 190 from yesterday. The bullion had earlier touched a record high of Rs 15,980 on September 16. The booming festival demand helped the metal achieve this level.
A sudden surge in demand from consumers in western India was witnessed on October 12 on the occasion of Pushya Nakshatra, an auspicious occasion to buy precious metals, especially among Maharashtrians and Gujaratis. Retailers of the yellow metal recorded a 20-40 per cent rise in sales compared with this day last year. In London, gold breached all previous records to hit $1,068.15 in early Tuesday trade on the dollar’s decline as the prime international currency increased the metal’s appeal as an alternative asset. The metal closed at $1,055.25 an ounce in New York on Monday.
Crude oil, which moves hand in hand with gold, firmed up to $74.27 a barrel, a rise of over $2 from the previous day. Firmer oil prices and an improvement in physical demand for gold after a sluggish year for jewellery buying are also pushing gold prices.
The US currency slid to a 13-month low against the euro on Tuesday. Weakness in the unit makes dollar-priced commodities such as gold and silver cheaper for holders of other currencies. The dollar weakened to 46.32 on Tuesday. The demand for gold is likely to continue in the near future due to festival and wedding seasons in India. On October 15, dhanteras, considered an auspicious day to buy precious metal, will be observed.
“Although consumers are a little apprehensive over fresh purchases amid expectations of an imminent correction, we are expecting a good business on Dhanteras,” said Ketan Shroff, director of Mumbai-based jewellery retailer Pushpak Bullions. Gold is getting a further boost from uncertainties over recovery in the US housing market. President Barack Obama has so far increased the US marketable debt to a record to bring growth on track in the world’s biggest economy.
Gold holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion delivery, perked up to a record 1,109.31 tonnes as of October 12.