Thread: Gold on High

Gold is glittering. On Wednesday, price of the yellow metal (standard gold) scaled Rs 12,000 per 10 gram to touch an all-time high of Rs 12,005 in Mumbai and Rs 12,040 in Delhi. While in Kolkata it reached Rs 12,225, it closed below Rs 12,000 per ten gram at Rs 11,930 in Chennai. A senior bullion merchant in Delhi said if this trend continues, gold price would soon cross Rs 15,000 per ten gram. However, rising prices have reduced demand for gold jewellery in the last six months. Considering the present global scenario, prices are unlikely to come down in near future, he added. India consumed around 800 tonne gold in 2007. A source said if prices remain at the present level, consumption of the yellow metal will decline in 2008. In the international market, because of crude price rise to around $100 per barrel, gold price crossed $920 per ounce (one ounce = 31.1 gram). At the same time, as rupee depreciated by around 1% against dollar on Wednesday to Rs 40.24 against 39.80 on Tuesday, gold prices rose sharply in India. Gold price in India is determined after adding import duty of Rs 100 per 10 gram on the converted gold price in rupee from the prevailing dollar rate in the international market. As gold price has risen sharply in the last couple of months in the international market, its price in the domestic market has also gone up. Gold price was ruling at around $650 per ounce in February 2007 in the international market. In the last one year, it has gone up by over 40% to $920 per ounce. A merchant banker said as dollar is depreciating against other currencies like euro and pound, fund managers in US parked a part of their fund in gold to hedge against dollar depreciation. In the Japanese market also, 5 to 10% of investment has gone into the yellow metal. Demand of gold in the investment market has gone up. But, production of gold remained stagnant at round 2,000 tonne.According to World Gold Council, 2,047 tonne of gold was mined in 2007. Besides this, around 1,000 tonne of gold came from the recycled market. An analyst said price has gone up due to a mismatch in demand and supply. At the same time, rise in the crude price also created an apprehension of rising inflation in the world economy. This also made investors put money in gold to hedge against inflation. In an inflationary environment, while value of currencies decline, gold prices rise.

So instead of watching share market watch for metals and oil (commodities.
For next few months share markets will be dull but commodity markets will do well.

People who have invested in metals hold for short term and book part of you profits when the commodity hits all time high and but when they dip, buy, this way u can trade and be invested also.

please give ur views