Turmoil in financial markets pushed gold to dizzy heights
Gold prices zoomed past all previous records to open at a new peak of Rs 13,500 in the billion market in New Delhi on Monday on brisk buying by stockists, influenced by strong global cues.
A turmoil in all financial markets after all dollar-priced commodities moving in different directions proved gold as a best buying during such crisis.
A remarkable rise in crude oil prices, weakening dollar, restricted inflow of foreign investors in emerging Asian stock markets left with no other option but to invest in gold, which surged to an all-time high of 1026 dollar an ounce in overseas markets.
Crude oil and gold advanced to records as the dollar dropped after the Federal Reserve cut its discount rate at an emergency meeting and JPMorgan Chase agreed to buy Bear Stearns as its shares collapsed.
The precious metal surged to 1026.45 dollar an ounce from previous close of 995 dollar in New York on Friday evening. Crude oil prices rose to record 111.42 dollar a barrel and gold to about 1,032 an ounce as investor confidence in financial assets eroded.
The Fed decision to cut the rate on direct loans to commercial banks by 25 basis points to 3.25 per cent was aimed at restoring confidence shaken by the collapse of Bear Stearns and more than 195 billion dollar in asset write downs and credit losses worldwide.
Asian stock benchmarks fell. The Bombay Stock Exchange benchmark Sensex tumbled by 4.5 per cent, Japan's Nikkei and Hong Kong's Hang Seng Index slumped more than 3 per cent. The dollar sank to a record against the euro.