Gold, silver hit new records

Mumbai, Jan 31 | Updated: Feb 1 2006, 05:30am hrs
Gold prices hit historic highs in both international and domestic markets on Tuesday as investors in global markets speculated that the mounting tension over Iran's nuclear program would increase oil prices, which may stoke inflation.

The precious metal hit a new 25-year high when gold for immediate delivery rose as much as $3.11, or 0.6%, to $571.46 an ounce, the highest since January 1981. In Mumbai, gold prices hit a new all-time high of Rs 8,210 per 10 grams, breaching the previous high of Rs 8,145 on December 21.

Spot silver too hit a new high by closing at Rs 13.400. Previous record high for silver was Rs. 13,365 on December 21. In the global market, silver for immediate delivery rose as much as 0.7% to $9.91 an ounce and is expected to hit $10-mark, soon.

Pure gold (99.9 purity) began the day with a huge gap at Rs 8,190 and soared to close at Rs 8,210, higher by Rs 100 over Monday's close. Standard gold (99.5 purity) too, opened sharply higher at Rs 8,150 and ended at a new high of Rs 8,170, again higher by Rs 100 over Monday's close. Despite being the world's biggest consumer of the yellow metal, India does not directly influence prices as international sellers and funds dominate the gold market.

Galloping Gold

THAT EXTRA SHEEN
The precious metal hits a new 25-year high when gold for immediate delivery rose as much as $3.11, or 0.6%, to $571.46 an ounce, the highest since January 1981
In Mumbai, it's Rs 8,210 per
10 grams, a new all-time high
WHO REALLY MATTERS
Globally, it's the geo-political happenings that dictate the price graph
India does not directly influence prices as the gold market is dominated by international sellers and funds
THE ROAD AHEAD
The metal may rise further should a US Federal Reserve statement on the economy later Tuesday prove to be more pessimistic than investors expect

The demand for physical gold was negligible in the local market. "Demand is always slow with prices on the higher side," Harmesh Arora, vice-president of the Bombay Bullion Association said. Spot price in Mumbai is derived from international rates as India imports most of its gold requirement of 700-800 tonne.

Geo-political happenings globally have led to the recent rally in the precious metals. Iran this month resumed research into the nuclear fuel cycle, after talks with the three European Union countries collapsed in August. The EU and US suspect the Iranian government intends to build an atomic bomb, while Iran says its nuclear program is solely for electricity. Gold's may rise further if the US Federal Reserve statement on the economy later on Tuesday proves to be more pessimistic than investors expect. A pessimistic outlook for the world's biggest economy would weaken the dollar. Some investors buy gold as a hedge against declines in the dollar. The Fed's statement is due to be released at 2:15 p.m. Washington time.