Gold continues to climb, now at Rs34,755 a tola

Wednesday, 11 November 2009 09:57

KARACHI: Amid expectations that gold may jump further, the precious metal reached Rs34,755 a tola, taking a Rs255 leap in a day on Tuesday. The opening rate for the local market on Tuesday was Rs34,600 as compared to Rs34,500 on Saturday, which later rose to Rs34,755 by the time businesses shut here in the city. This is so far the highest level in the history of gold. This swift rise is said to have been caused by bulk buying of gold by Sri Lanka, besides India and China who have bought from the IMF, said Haji Haroon Chand, President of All Sindh Saaraf and Jewellers Association. A number of countries are diversifying their foreign exchange reserves and moving away from the weakening dollar to gold. In the local markets, the rate for 10 grams of gold jumped to Rs29,790 from Rs29,575, scoring a Rs215 rise in a day. In the international market, an ounce of gold was priced at $1,104, up from $1,095 in a day, which is expected to rise further, said Chand. However, as the rate of the precious metal goes up, local dealers see a further decline in business as the buying power keeps on falling day-by-day amid an economic downturn in the country. In London, gold prices rallied toward recent record highs above $1,110 an ounce on Tuesday, reversing earlier losses, as the dollar erased initial gains against a basket of six major currencies, adds Reuters.

Spot gold hit a session high of $1,109.20 an ounce and was at $1,106.90 at 1540 GMT, against $1,103.85 late in New York on Monday. The market earlier dipped as low as $1,096.60. The metal also found support from renewed investor interest after the International Monetary Fund announced last week it had sold 200 tons of gold to India s central bank, which prompted the metal to reach record highs. Given all the noises hedge funds have been making, plus all the noise surrounding further potential central bank buying, it is difficult to see much of a downside, said Societe Generale analyst David Wilson. US gold futures for December delivery on the COMEX division of the New York Mercantile Exchange firmed $5.90 to $1,107.30 an ounce. The precious metal hit an all-time high of $1,110.85 an ounce on Monday as the dollar index, which measures the US currency s performance against a basket of six others, hit its lowest since August 2008. Gold initially struggled to break new ground as the dollar edged up on Tuesday, but bounced back as the currency slipped back towards 15-month lows against a currency basket. Strength in the US unit dampens gold s appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies. The dollar remains susceptible to further losses, analysts said. My feeling is we will actually see the dollar break down further in the next few weeks, and that will help take gold up to new levels, said Standard Chartered analyst Daniel Smith. We think $1,200 is quite a realistic target before the end of the year.