KARACHI: Gold jumped by Rs 550 to reach new high at Rs 50,300 per tola in local bullion market Wednesday, while price in international market also climbed to $1,570 an ounce, metal expert said. Similarly, 10 grammes price also climbed by Rs 475 to stay at Rs 43,114 they added.
They said fresh highs in gold would keep even pace with an initial target seen at $1,650 per ounce on international demand. “The fundamentals are driving the price and those fundamentals including high returns on investments and gold as safe haven besides hedging,” metal expert in London Saleem Ahmad said. The euro fell against the dollar early in the day reversing year-end gains on persistent concerns about euro zone debt. “We look for the gold market to keep its peak journey in second half 2011 on a strong demand by India and China besides international debt issues,” he said.
China and India started fresh buying and this was due to support from hedgers and renewed investment inflows in the market. Saleem said background support would be offered by quantitative ease and improved (jewellery) demand in international market. The strong inverse relationship between gold and the dollar weakened to such an extent last year that gold prices managed to rise nearly 33 percent at the same time that the dollar rose more than 6.5 percent against the euro.
Gold prices in international market gained 6 percent in 2011, supported by investors and hedgers. The yellow metal allured the interest of investors, as there was a little chance of getting better returns on securities and hedging of the dollar. Hedging in gold is still on the higher side as it touched a new high around 78 percent in six months of 2011. He said the domestic sale of yellow metal registered a decline by around 80 percent in same period, though the demand was still there on wedding season but the customers curtailed volume of buying. – Dailytimes