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Indian Investors Continue to Buy Gold

Wealthy investors buy gold despite peak prices...

GOLD HAS soared to a new peak in India, and high net worth individuals just can't get enough of it, writes MineWeb's Shivom Seth in Mumbai.

Several investors continue to Buy Gold in physical form despite the peak prices, keen to de-risk their portfolios and reap rich rewards. 

"The stupendous rise of gold has not deterred investment for the metal in the physical form,'' said Moreshwar Kedia, bullion retailer. 

"We see gold consolidating at $1,800 before or by the year-end with a few dips on the way. The dips will be an opportune moment for investors to accumulate the metal,'' he said.

Early on Thursday, Gold Prices rose to an all-time high in India of over $539.92 per 10 gram, tracking international prices. Silver too witnessed a sharp spike to revisit its 3-month high, on strong speculative build up amidst rising industrial demand, traders said.

Bullion retailer Batook Mehta said Indian wholesale purchases were seen picking up ahead of the festival season, with many investors keen to shore up on the precious metals, "as higher prices are expected.''

He added that traders were targeting gold on the back of the debt crises in the US and Europe and in anticipation that retail gold demand would gain pace in August, when the festival and wedding season starts in India, which is traditionally the world's biggest consumer of bullion.

"Over the last one year, Gold Prices in India have risen by 34%. Since there are no signs of an immediate revival in the economic fortunes of the world's leading economies like the US, Europe and Japan, many punters expect Gold Prices to rise further from the current levels. The outlook for gold is extremely positive,'' said Mehta.

Silver, too, has got a new shine. Silver ready (.999 fineness) jumped by a hefty $33.62 per kilo in Mumbai, to finish at $1,363.41 per kilo as compared to $1,329.78 on August 2. 

Traders said silver prices have risen further at the bullion market on hectic buying from speculators and stockists.

Bullion analyst Kunal Shah, of broking firm Nirmal Bang said silver may see some profit taking during the day. "I expect prices [per kilogram] to test $1,367 to $1,368 by the end of day,'' he said.

Riding high on a firm trend overseas, gold futures for delivery in February next year reached a record high of $554.55 per 10 grams on Thursday. In addition, strong demand at the domestic spot markets also helped gold scale new highs. 

At the Multi Commodity Exchange, gold for delivery in February next year, climbed $5.12, or 0.93% to a record level of $557.55 per 10 grams, with a business turnover of 12 lots. 

Similarly, the metal for delivery in October also shot up by over 1%, to reach a record high of $541.05 per 10 grams, with a business volume of 3,903 lots. The most-active gold for October delivery on the MCX was trading 1.7% higher by afternoon, after hitting a record high. Gold prices in the Mumbai spot market also went up on Wednesday and closed at a new high, traders said.

The precious metal for delivery in the current month August, has also gained by 1.01%, with a trade turnover of 74 lots. Traders attributed the rise to a firming trend overseas, where the metal soared to an all-time-high on concerns over a slowing global economic growth.

Earlier this year, silver was the favourite of punters. Its price reached a lifetime high of $1,664.77 a kilo on April 28, from around $832.30 in January. Trading volumes, however, crashed badly in June, with traders sitting on huge losses after a bad crash in the price of the white metal.

Nareshan Ramaswamy, head of commodities at broking firm Ventura Securities expects silver to end the week with a gap of $4.94 to $5.06, somewhere close to the range of $1,379 to $1,391. "One could initiate a buy in Silver MCX contract either at these price levels or at a slight dip. Investors are bound to profit,'' he added.

Traders also said Gold Prices got a boost from speculative buying on expectations that central banks of different countries could start buying the precious metal. With the South Korean central bank on Monday buying 25 tonnes of gold during the two previous months, speculation is rife if India will follow suit.

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Founded in 1999 as part of the Johannesburg-listed MoneyWeb media group, Mineweb is one of the world's leading sources of mining and metals-investment news, comment and analysis. Managed since 2003 by professional mining engineer Lawrence Williams – formerly of Mining Journal, and with more than 30 years' technical and financial experience in the sector – MineWeb provides thorough, international coverage of the natural resources industry.

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