Making gold even more glittering as an alternative investment, the prices of the metal zoomed across the country to cross the milestone of Rs 11,000 per 10 gram, amid surging global rates due to soaring crude oil prices and softening of dollar.
However, it goes without saying that the soaring prices ring in bad times for retail buyers ahead of the marriage season.
Kolkata bullion saw the maximum increase of Rs 315 per 10 gram to Rs 11,230, followed by Delhi where rates improved by Rs 290 to Rs 11,050. In Chennai prices surged by Rs 200 to Rs 10,890, whereas in Mumbai prices firmed up Rs 130 at Rs 11,030.
Traders in Delhi bullion said the domestic prices follow the international prices, which in turn is influenced by the usual suspects rising oil prices and weakening of dollar. Gold and dollar usually move in opposite direction. When the dollar declines, gold gains as an attractive alternate investment option, they added. It is ditto in the case of oil prices too. A jump in crude oil prices normally results in an increased demand for the precious metal as a hedge against inflation, they said.
Yesterday, the crude prices crossed the psychological USD 100 per barrel mark in New York. Analysts believe that the US manufacturing index slipping to a five-year low has further weakened the US dollar against the world's major currencies. "A sharp rise in crude oil and weakening US dollar is contributing to the gold rally both in global and domestic markets," Harish G, head, Karvy Comtrade Research, told PTI.
Harish said that the US dollar was trading weak against major currencies and that boosted demand for alternative investments today. Besides, the increase in crude oil prices, which touched a record of 100 dollar a barrel for the first time in history yesterday, also supported the gold rally.
The gold is seen as a defense against inflation, which is being driven in many countries by higher oil prices, he added.
February gold settled at USD 22 higher to USD 860 an ounce on the Comex division of the New York Mercantile Exchange. The Comex futures hit a contract high of USD 864.90.
The rally continued in the domestic futures market also. Futures prices both in MCX and NCDEX traded on a firm note. January contract at MCX made a significant jump by Rs 500 at Rs 11,165 per 10 gram. At NCDX, it went up by Rs 183 at Rs 10,931 per ten grams. The spot prices of gold were however hovering near Rs 11,000 levels at both the exchanges.
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