Fuelled by global developments, gold prices gained Rs 215 for 10 gm to hit a new high of Rs 21,460 on Friday. Standard gold, used for making jewels, also rose by a similar amount to Rs 21,460 (Rs 21,245) for 10 gm. Silver prices also jumped sharply by Rs 2,640 a kg to Rs 63,930.

The yellow metal in the international markets rose sharply to trade above $1,470 an ounce after the US Government announced its decision to keep the interest rate low. This move is expected to weaken the dollar and result in gold gaining further.

Besides expectations of dollar weakening further, high oil prices and geo-political risks also helped gold gain.

Mr Harmesh Arora, Director, NIBR Bullions, said gold prices in the domestic markets are purely driven by global developments. In fact, he said, the sharp appreciation in prices in the last few days.

Unlike the rally in gold, the spike in silver prices may sustain as there seems to be a huge supply shortage.

“Most of the silver supply currently is derived as a by-product from gold, copper, lead and zinc mining as many mines have stopped functioning and no new mine has opened of late. We expect silver, which is currently trading at $42 an ounce, to touch $52, a peak tested in 1980,” said Mr Arora.

Shrinking supply notwithstanding, the demand for silver has soared from industries such as photography, jewellery and silverware.

The steady rise in silver prices over the last few months has attracted investment demand. Investors are consciously switching from gold to silver as they expect further appreciation in prices with growing industrial demand.

Fear of the US Government unleashing a third round of stimulus measures has also aided the run-up in gold prices, said an analyst.

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