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Business Other News 08 Sep 2016 Gold hits 30-month h ...

Gold hits 30-month high

DECCAN CHRONICLE.
Published Sep 8, 2016, 1:42 am IST
Updated Sep 8, 2016, 1:49 am IST
Weaker dollar and festive demand in India boost yellow metal price.
The price of gold (in New Delhi) crossed Rs 31,500 per 10 gram,  last seen in February 2014.
 The price of gold (in New Delhi) crossed Rs 31,500 per 10 gram, last seen in February 2014.

Mumbai: Gold prices soared to a 30-month high in the local market as weakness in the US dollar helped the yellow metal to sustain its winning momentum in the global markets while increased demand from retail jewellers ahead of the upcoming festive and wedding season also provided additional strength to the rally.

The price of gold crossed Rs 31,500 per 10 gram, a level last seen in February 2014. Globally, dollar and gold have an inverse co-relationship. The US dollar came under selling pressure as the prospects of an immediate rate hike by the US Federal Reserve diminished following a lower than expected rise in US payroll data for the month of August.    

 

“The rise in the price of gold is mainly on account of global factors. While the weakness in dollar led to a rally in gold in the international market, the sharp appreciation of the rupee against the dollar on Wednesday actually capped a major upside in domestic gold prices. Otherwise it would have crossed Rs 31,800 per 10 gram in the domestic market,” said Bachhraj Bamalwa, director of Nemichand Bamalwa & Sons and past president of Gems and Jewellery Federation. “Historically, if we see, gold prices have always climbed higher in September as retail jewellers jack-up their stocks ahead of the festive season demand,” he said.

Though demand from consumers remains tepid at the moment due to the prevailing higher prices, Mr Bamalwa expects the buying activity to pick up pace during the October-December period. According to fund managers, gold as an asset class still remains a useful portfolio diversification tool that will help reduce the overall portfolio risk amidst the uncertain global macro-economic situation.

While Brexit didn’t lead to an immediate economic crisis, Chirag Mehta, senior fund manager at Quantum Asset Management Company (AMC) believes it will have far reaching long-term consequences for the EU. “The central bank’s intervention for now has removed the risk from the markets.”

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