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Gold glitters at Rs 15K for first time as market melts

The yellow metal is glittering. Gold prices crossed the Rs 15,000-level for the first time in the history of the bullion market..

Written by ENS Economic Bureau | Mumbai | Published: February 18, 2009 12:35 am

The yellow metal is glittering. Gold prices crossed the Rs 15,000-level (per 10 grams) for the first time in the history of the bullion market here today on safe-haven buying. Deepening recession across the globe and tumbling equity markets made the precious metal more attractive.

Standard gold (99.5 purity) rallied by Rs 475 per ten grams to Rs 15,230. Pure gold (99.9 purity) also shot up to Rs 15,295 from Rs 14,810 yesterday. Silver ready (.999 fineness) rose by Rs 705 per kilo to Rs 22,315.

However,the benchmark Sensex dropped for a second consecutive day on Tuesday,falling 2.9 per cent to its lowest close in three weeks,as weak world markets added to the gloom caused by the absence of a stimulus for the industry in Monday’s budget. The Sensex shed 270 points to 9,035,its lowest close since January 27. The 50-share NSE Nifty index also closed down 2.74 per cent at 2,770.50 points.

Banks were among the major losers after their near-term outlook was seen dented by higher-than-expected government borrowing plan,which could keep bond yields high and erode the value of bonds held by banks. Reliance Industries contributed the most to the BSE index’s losses,falling 3.9 per cent to Rs 1,267.60,its lowest close in three weeks.

According to dealers of the precious metal,fears over worsening global recession boosted gold prices. “Investors turned their attention to gold as a risk free investment rather than investing in the uncertain equity markets,helping gold to continue its north-bound journey,” said a market source.

However,the steep rise in prices has kept buyers away. Many people still doubt whether this is the right price for gold. “Nobody is interested in buying…,” said Daman Prakash,director with Chennai-based wholesaler,MNC Bullion,adding that inventories in warehouses have piled up.

Gold is expected to coast to Rs 16,000 after last week’s stretch of record-making highs,as heavy safe-haven buying overseas showed the peak has yet to come.

With agencies

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