Financial Daily from THE HINDU group of publications
Saturday, May 25, 2002
Agri-Biz & Commodities - Precious Metals
Gold at new high on global rally
CASHING IN: Customers queueing up to sell gold jewellery as prices skyrocket.
MUMBAI, May 24
GOLD moved to a new high in market today primarily on account of a surge in the prices of the precious metal on the overseas markets.
In Friday's trade, gold was fixed at $320.90 per troy ounce, the highest since October 14, 1999, on the London Metal Exchange (LME).
In Mumbai, 24-carat gold ended at Rs 5,315 per 10 gm (Rs 5,270) and 10-tola bar moved up to Rs 62,400, gaining Rs 400 overnight.
Silver (.999 fineness) closed at Rs 8,240 per kg as compared to the previous Rs 8,170.
International gold prices have been on a short burst of a bullish phase, mainly because the precious metal provides safety in the backdrop of uncertainties globally, economic as well as political.
"Investors have been shifting from stock to bullion markets because of uncertainties resulting from economic slowdown, September 11, Afghanistan, Israel-Palestine conflict and the overall weakness on Indian stock markets,'' said Mr. Sukumar Pillai, Regional Director, World Gold Council (WGC).
Investors have often resorted to a shift in investment to gold because of its safety.
Additionally, fears of war between India and Pakistan had also pushed up prices of both gold as well as silver on the global and domestic markets.
Even as prices of precious metals soar in the domestic market, demand is on the verge of petering out because the Indian marriage season is on its last leg before it recommences in mid-August.
While gold jewellery purchases may see a dip because of the end of the marriage season and the price elasticity nature of the demand, gold bullion purchases are likely to remain firm, according to Mr. Sukumar.
However, jewellery purchases account for a major bulk of gold demand in India.
There are indications of sale of gold jewellery as prices have turned attractive for liquidation. "There have been cases of people selling old, broken pieces of jewellery,'' Mr. Sukumar said.
Internationally, gold had opened 2002 at a level of $279 per troy ounce and silver had commenced the year at 4.69 per troy ounce.
The fall in dollar's value against most currencies also contributed to the upward movement in gold. The rupee today ended 48.9850/9950, up from the previous close of 49.0550/0650 on hectic dollar sales.
According to a WGC report, Indian gold demand fell by 40 per cent in the first quarter of 2002 to 149.8 tonnes following a sharp rise in prices in February.
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