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Gold retains glitter as stock markets turn sour

Gold retains glitter as stock markets turn sour
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First Published: Wed, Aug 08 2007. 02 17 AM IST
Updated: Wed, Aug 08 2007. 02 17 AM IST
New Delhi: Having burnt their fingers in the recent stock market fall, which wiped out more than Rs2 trillion of investors’ wealth, people have started parking funds in precious metals.
Gold prices have appreciated by about 2% since 27 July, while in the same period the stock market’s benchmark index, Sensex, has lost more than 5%.
In the domestic market, gold prices are currently being quoted at more than Rs8,800 per 10gm, after dropping to nearly Rs8,720 level on 27 July. Analysts expect it to cross the Rs9,000 level this week and the Rs10,000 mark by 2007-end.
The BSE Sensex had plunged 542 points on 27 July and another 615 points on 1 August due to scare of foreign institutions pulling off their money in the wake of US subprime lending crisis. On Tuesday, the index closed at 14,932.77 points.
“The next trigger will be provided after the US Federal Reserve’s meeting on interest rate later tonight,” an analyst at commodity brokerage house Karvy Comtrade said.
He said gold prices would get a boost if the US central bank indicates reduction in the interest rates, adding that such a stance is likely in view of a slow down in the US economy. The analyst said gold price might touch the Rs10,000 level by year-end, while adding that the short-term trend would be clear only after the Fed meeting.
In the international market, gold prices have plunged by about $10 per ounce to $660 on 27 July, but since then it has recouped all its losses and is currently trading at about $670.
Domestic markets have also seen gold prices recouping losses since 27 July, even though the plunge was identical in gold prices as well as stock market on the first day of the recent downtrend.
In comparison, the stock markets’ benchmark Sensex is still nearly 700 points down from the levels before the downtrend began.
The three falls in the Sensex on 27 July, 1 and 6 August, have taken the cumulative net loss in investor wealth to close to Rs2.1 trillion.
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First Published: Wed, Aug 08 2007. 02 17 AM IST