Dizzy gold touches Rs 20,000, investors advised caution
Gold crossed the psychological benchmark of R20,000 per 10 grams in trading on Thursday, marking a new high in the dizzy tale of stocks and gold booming in the past year.business Updated: Oct 26, 2010 16:58 IST
Gold crossed the psychological benchmark of R20,000 per 10 grams in trading on Thursday, marking a new high in the dizzy tale of stocks and gold booming in the past year. The yellow metal closed at R19,880 per 10 grams as investors put in money in bullion in movements linked to Asian countries not letting their currencies appreciate.
Silver, too, has moved sharply and crossed the level of R37,000 per kg on Thursday.
With the Diwali season shopping around the corner, the rise dented demand for gold.
“Demand is not coming. Jewellers are now expecting a rise in scrap gold supplies,” Reuters quoted a bullion dealer as saying. Gold futures on the Multi Commodity Exchange struck a record high of R20,028, surpassing the previous peak of R19,938 hit on Oct. 13.
Experts say 25 countries have taken some action to arrest their currency appreciation over the past 20 days. Gold is seen as a global currency of sorts. While gold has appreciated by around 4 per cent in India in the month of October alone, market participants feel that a further rise from these levels is unlikely in the immediate future.
“I would not advise to buy at these levels as I expect a correction. People who had invested can instead book some profits,” said Vaidya.
“I see a correction in the near term as a lot of hot money and speculative money that has gone into gold will move out since most of the positive news for gold has already been discounted in its price,” said Ritesh Jain of Canara Robeco MF.
Traders in the market were uncomfortable with gold’s new highs. “I did not expect this much rise and do not see an upside from here,” said Bhargava Vaidya, a Mumbai based gold expert. “There is a pause in demand and buyers are absent at levels of R20,000 as prices have raised concern.”
Gold has grown at a compounded annual growth rate (CAGR) of 23.7 per cent over the past five years, more than the stock benchmark, Sensex, which has risen by 20 per cent over the same period.