Though Asian markets plunged into a sea of red, the yellow metal continued to surge, touching a new high of Rs 19,050 per 10 grams on Tuesday. Experts say that since financial anxiety around Europe will continue in the short term, gold will continue to remain volatile with an upward bias.
“Over the past few months investors put a lot of money into the dollar,” said Jamal Mecklai, CEO, Mecklai Financial. “Now the market feels overextended in dollars, it is investing in gold. While it is hard to see the price going higher from these levels but because of nervousness all around, it is harder to see it getting weaker.”
Traditionally, when the dollar rises, gold prices fall. But this time around, both the dollar and gold are rising. Gold prices have risen by 28 per cent over the past one year.
“As the sentiments are weak, investors are turning to gold since it is a tried and tested asset class for providing safety,” said Keyur Shah, associate director, World Gold Council.
While gold prices rose in the international markets, the 8 per cent depreciation of the rupee over the past one month pushed the prices of the metal higher in India, a gold analyst said.