Festival demand pushes gold prices to new peak

Festival demand pushes gold prices to new peak
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First Published: Sun, Nov 04 2007. 12 54 PM IST
Updated: Sun, Nov 04 2007. 12 54 PM IST
PTI
New Delhi: With just a few days left for Diwali and Dhanteras, gold prices have already zoomed to new peaks and marketmen expects them to soar further well past Rs11,000 per 10 gram level as the festivities approach closer.
Gold rose to a new 18-month high of Rs10,310 per 10 gram on Saturday, 3 November, and with expectations of buying activity improving analysts see a further rise of about Rs600-800 by Dhanteras, considered an auspicious day for buying gold and jewellery.
Gold prices are already more than Rs1,300 higher than the last Diwali levels. On Diwali day last year, the gold price stood at Rs8,975 per ten gram.
Besides festival demand, a sharp surge in international prices has also added to the rally in the domestic markets. The gold prices in New York touched a 28-year high of $808.5 last week.
“Weakening dollar and rising crude oil and recent Federal Reserve interest rate cut also enthused the market sentiment. Gold rose $14.80 to $808.50 an ounce on the Comex division of the New York Mercantile Exchange, a level last seen in January 1980, while the precious metal in India witnessed levels above Rs10,000 in May 2006,” Commodity brokerage firm Karvy Comtrade analyst Harish G told PTI.
“With the depreciating value of rupee, the spur in the prices of gold in the domestic market is not that high as compared to last year when it ruled Rs10,730 per 10 grams in May,” he said.
The domestic prices are likely to touch Rs10,500 levels on Diwali day this year while it may hit $850 an ounce in the overseas market, the Karvy official said.
The trend, however, seems to be good sign for gold investment as more equity investors are now diverting their funds into this safer asset.
“Today, many investors can afford to buy a kilo of gold. Unlike equities, gold is a safe bet. Dhanteras could be an everyday affair for such investors when the gold bull is rallying on a right track,” said a gold trader.
“If Dhanteras is supposed to bring eternal good fortune then investing in gold in a bullish market would also fetch good returns,” he added.
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First Published: Sun, Nov 04 2007. 12 54 PM IST