The Hindu Business Line : Bullion `shines' in line with global trend

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Mumbai Feb. 20 Bullion prices in the international markets gained on Monday amidst thinly traded volumes owing to holiday in the US and Chinese markets . Though it pared part of its gain on Tuesday, analysts are of the view that it would continue to rise in the coming days. Taking cue from the overseas markets, domestic prices rose with gold quoting Rs 9,635 for 10 gm (.999 fineness) and silver quoting at Rs 20,440 per kg in Mumbai.

While gold prices hovered well above at $666.90/667.60 /oz in online trades on Tuesday, silver touched $13.91/13.96/oz maintaining gains from Friday trades.

Precious metal prices have rallied in the international markets following weak US economic data.

Gold futures for April delivery rose $2.30 or 0.3 per cent to $675.10 an ounce in after-hours trading on the Comex division of the New York Mercantile Exchange.

"Price support is coming from good demand," said Mr Mukul Sonawalla of Narrondas Manordass. Arrivals — both imports and local supply — were negligible keeping gold prices steady at $670, he added.

Any demand rise after the Budget will result in a spurt in prices, he said. Post-Diwali there has been only a 7-8 per cent rise in the price of gold, he added. "Gold last week surged despite a firm dollar as the weak economic data (from the US) indicates a long-term weakness of the dollar," said Mr Bhargav Vidya of B. N. Vidya and Associates. Generally, gold moves contrary to the dollar.

Gold demand

The total Indian demand for gold, comprising jewellery and net retail investment, fell by 4 per cent in tonnage terms, according to the latest report of World Gold Council.

Demand for retail investment purposes rose 38 per cent in terms of tonnage in calendar year 2006. Jewellery demand saw a dip of 14 per cent year-on-year.

However, the demand for yellow metal in the fourth quarter of 2006 has far exceeded the demand in the same period of 2005, rising by 110 per cent.

More Stories on : Gold & Silver | Commodity Markets

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