Gold prices closed at an all-time high of Rs 32,585 per 10 grams on Tuesday on sustained buying as the rupee plunged to a new low of 66.25 against the US dollar, making the dollar-quoted yellow metal expensive.
As markets plunged and investors exited stocks, gold regained its safe-haven tag. A fallout of a possible military action against Syria by US-led forces that pushed the bullion’s price in global markets also contributed to the rise in domestic markets.
On the Multi Commodity Exchange (MCX), gold for delivery in October zoomed to Rs 33,642 per 10 grams against its previous close of Rs 31,876.
According to brokerage firm Sharekhan, the metal may become more expensive following further depreciation in the rupee.
Moreover, prices may rise even further due to the upcoming festive season.
Gold price in overseas markets hit a 11-week high of $1,400 an ounce as traders hoped that weak US data could stymie the US Federal Reserve’s plan to taper off its stimulus measures later this year. Gold has gained more than 6% this month and almost 19% from its year low of $1,180.71 hit in late June.
Higher gold prices could dent demand in India, the world’s biggest buyer of the yellow metal, even as traders scramble for supplies after the government put a quota system on imports by linking exports with domestic consumption.
“Gold futures touching record highs has to do mainly with rupee depreciation,” said Shrinivas Viswanath, co-founder of brokerage firm RKSV.
Silver also rose for the third day by jumping Rs 800 to Rs 54,800 per kg on increased offtake by jewellers and industrial users.
“Rupee depreciating to a historic low along with supply problems led the surge in gold,” a forex dealer said.