Gold prices hit another record on global woes

Sep 08, 2010 |

Correspondent

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Mumbai, Sept. 8: The precious metals — gold and silver — touched fresh historic highs on Wednesday. A major factor pushing up prices internationally is the uncertainty about a recovery in the global economy — pushing investors towards gold.

On Wednesday, prices of gold touched a fresh high of `19,470 for 10 grams while silver price shot past the `32,000/kg mark. In spite of the high prices, demand for gold is expected to rem-ain strong in India as the festive season approac-hes. India’s total gold imp-orts added up to 328.7 tonnes for the firsh half of 2010.

Demand for the second half is usually expected to be higher — because of the festive season. Some analysts fear it could lead to higher prices, but that’s a contested opinion. “Indian festive season doesn’t have an impact globally. Prices are up here because international prices have gone up and they are up because of economic troubles,” says Mr. Rajesh Mehta of Rajesh Exports, a gold importer.

This has been the factor that’s keeping gold prices high for the past several months. Mr. Mehta expects gold prices to fall in the medium term and increase in the long run.

In a recent note on gold, brokerage house JP Morgan notes that the average amount invested by Indians in purchasing gold over the past three years was $20 billion annually. This is more than the investment in any other instrument — mutual funds or Ulips.

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