The Hindu Business Line : Gold zooms past Rs 11,000 per 10 gm

Mumbai, Jan. 3 Gold prices made history as they soared to a record $ 865.35 an ounce in the London A.M fixing on Thursday, tracking which the domestic gold surged to Rs. 11,000 per 10 gm.

On Wednesday, gold was fixed at $ 840.75/oz in London while in the Indian market it quoted at Rs 10,700 per 10 gms, its last recorded high. (Last year, gold prices had hit $850/oz for the first time since 1980.)

Market participants attributed the surge in bullion prices to the high crude oil prices, geo-political tensions and weakness in the dollar.

While the banks’ landed cost of gold was Rs 11,070 per 10 gm, the market prices ruled between Rs 10,990 and Rs 11,000, said an official with Axis Bank.

This disparity in price signifies that the demand in the market is very poor. Prices are way past the comfort level of Indian buyers, said Mr Bhargav Vidya of B. N. Vidya and Associates.

There are instances of a lot of recycling and of investors dumping gold bars in the market on account of higher prices, the bank official said. The recycled and scrap gold is sold at a discount to imported gold, accounting for the disparity in prices, he added. Gold from scrap and recycling can take care of the limited demand at the prevailing high prices.

But the trade fraternity does not expect the demand to come in any time soon. The reason is that investors are putting their monies in the booming stock markets, according to Mr. Prithviraj Kothari, Director of RiddiSiddhi Bullions Ltd.

Investors have gone on to invest in the stock markets, as returns on stocks are higher than what gold can give, said Mr Suresh Hundia, President of the Bombay Bullion Association.