The Hindu Business Line : Yellow metal touches all-time high

Mumbai, Jan. 25 Amidst all the equity and financial market mayhem recently, gold stood true to its safe haven status. The yellow metal once again breached its last peak ($913 an ounce) and reached a new all-time high of $924 an ounce in the London spot market.

Tracking the international market, gold prices in India too, reached an all-time high of Rs 11,780 per 10 gm. However, despite the over $10-an-ounce price movement of the yellow metal in the international market, prices in India were contained around the last peak (Rs 11,700 per 10 gm) due to a strong rupee, said a treasury official with a bank. The rupee was 39.40 against the dollar on Friday.

The gold rally that began internationally at $840/oz at the beginning of this year still sustained except for a short-lived hit that took it down to $862 an ounce (A.M. fix on January 22), but immediately recovered to $875/oz (P.M. fixing on January 22).

“While the gold bulls haven’t been keying off physical supply side news events lately, it should be noted that the gold market is flush with talk this morning that South African gold production is in the process of being seriously crimped because of power problems and that seems to give the rise of investment interest added significance,” said a gold market report on the Chicago Board of Trade Web site.

According to a recent report from the London-based precious metals consultancy, GFMS, Chinese gold output had risen to a record high of 276 tonnes last year, up 12 per cent over 2006, while South Africa production fell to 272 tonnes, from just over 275 tonnes in 2006.

With seasonal demand for jewellery in the country being round the corner, traders have been putting in buying orders at prices dipping to the $800-850 levels, said a bank official.

But this is not so true for the investment demand, which seems to have been affected by the mayhem in the equity markets.

Contrary to the sluggish demand story of gold jewellery, bars or coins, scrap purchasers are a happy lot. Scrap purchases have been good, averaging 5 kg per day, said a scrap trader.

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