Gold at 3year high on black money crackdown, global cues

"The bullion demand has got a boost as people having huge funds in cash, were seen converting their wealth into gold as a safe-haven", said Rakesh Anand, a Delhi-based jeweller, reflecting the market mood.

By: PTI | New Delhi | Published:November 9, 2016 8:10 pm
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Gold prices on Wednesday shot up to a maximum hike in the past 3 years reaching Rs 31,750 per ten gram, a whopping hike of Rs 900, following the government’s scrapping high-denomination notes to curb black money and a firming trend overseas in view of Donald Trump’s victory in US presidential election. In a surprise move, the government banned Rs 500 and Rs 1,000 currency notes in a bid to curb black money. It was gold’s highest closing level of Rs 31,820 after November 19, 2013 in the bullion market in New Delhi. “The bullion demand has got a boost as people having huge funds in cash, were seen converting their wealth into gold as a safe-haven”, said Rakesh Anand, a Delhi-based jeweller, reflecting the market mood.

Moreover, the rupee weakening against the US dollar by 23 paise to 66.85 (intra-day) at the forex market, made dollar-quoted precious metal expensive. India imports huge quantities of gold to meet domestic demands. Sentiment also got a boost after gold jumped nearly 5 percent in global market to its strongest in more than five weeks as investors sought safe havens in view of Trump’s victory over Democrat Hillary Clinton in the US election. Investors have been diverting funds from stock markets, which were down amid US election trends since Wednesday morning, to bullion.

Gold in Singapore, which normally sets the price trend in the market in New Delhi, soared as much as 4.8 per cent, the biggestintra-day surge since June to USD 1,337.38 an ounce. Silver also reclaimed Rs 45,000 per kg mark by registering a steep rise of Rs 1,150, largely in tandem with global trend as money flew to safe-haven investments following melting global equities. On the domestic front, gold of 99.9 and 99.5 per cent purity rallied by Rs 900 each to Rs 31,750 and Rs 31,600 per 10 gram, a level last seen on November 19, 2013. Sovereign also shot up by Rs 200 to Rs 24,700 per piece of eight grams.

In a similar fashion, silver ready surged by Rs 1,150 to Rs 45,000 per kg and weekly-based delivery by Rs 1,225 to Rs 44,275 per kg. Silver coins too spurted by Rs 1,000 to Rs 77,000 for buying and Rs 78,000 for selling of 100 pieces. Bullion traders said a significant rise of 3.43 per cent gold prices on the Multi Commodity Exchange further supported the uptrend, indicating more demand for the precious metals in coming sessions.