Gold prices on Tuesday crossed the Rs 5,500 mark in Mumbai to touch Rs 5,520 per 10 gms following five-year high prices in the international market where the gold hit a new high of $340-341.25 an ounce, its firmest level for the metal since June 1997.Gold’s latest jump was triggered by the weakening of the US dollar against the euro, which added to fears over higher oil prices and a growing list of political tensions. However, even when domestic bullion traders say the prices may go up further, sources from the bullion banks say there is “very thin” demand at these high levels.“Now that the marriage season is nearing the end before the Makarsankranti (January 14), retail buyers are staying away from buying fresh gold, not at least at these high levels,” said an executive of a leading bullion bank. “There is no reason for such high prices for gold,” the source added. Even in the London market, reports indicate there is hardly any physical demand for the gold at such high prices, except that there were few institutional investors, who preferred to buy at dips.In Mumbai, observers say, prices could soon touch the all-time high of Rs 5,713 recorded on February 13, 1996, especially because of the way the gold prices have been shooting up and scaling new highs. Standard gold opened on a remarkably higher note at Rs 5,520 and after moving narrowly, closed at the same level, showing a whopping rally of Rs 85 over yesterday’s close of Rs 5,435.The ten-tola (TT) gold bar (.999 purity) also resumed strong at Rs 64,600 and after moving in line with standard gold, closed at the same level, revealing a steep jump of Rs 1,050 over the previous level of Rs 63,500. Whatever demand is witnessed, traders say, was mainly speculative one and not from investors or physical demand. And the evidence of subdued physical demand for the metal was mainly from India.Gold imports into India were badly hit as prices soared to a new five-year high, leaving traders sidelined. A large section of bullion buyers said they have temporarily suspended their work as no one was willing to touch the metal at current prices. Traders here said they would return to the market if prices fall to about $330 an ounce, or stabilise at current levels for about two weeks.
