The yellow metal hit $1,274.50 an ounce on Thursday, a rise of $14 from Wednesday in London trade but remained relatively calm on Friday. Crude oil followed gold and jumped 2.3 per cent to $113.02 a barrel since militant-fulled violence in Iraq on Wednesday.
At Zaveri Bazaar here, standard gold hit a three-week high to close on Friday at Rs 27,410 per 10g, a jump of 1.1 per cent from Thursday. Pure gold also moved up to close at Rs 27,560 per 10g on Friday from the previous close of Rs 27,250 per 10g. Silver followed to close at Rs 42,300 a kg on Friday from Rs 41,850 a kg the previous day.
“Gold found safe haven buying from investors on falling global equity markets. Crude (oil) has fundamental reasons to move up on supply fear from Iraq. While the sentiment will remain elevated in crude oil, gold will relatively calm down faster than crude,” said Gnanasekar Thiagarajan, Director, Commtrendz Research.
Spot gold prices have been trading positive for quite some time, consolidating from $1,240 levels. Bargain buying at lower levels and escalation of violence in Iraq helped gold prices move up. Also, economic numbers, including unemployment data in America, is not in tune withthe market expectations. Hence, gold found support from short-term investors.
“This positive momentum is expected to continue if militants in Iraq take control over the southern area, which has a majority of the oil fields and infrastructure,” said Prathamesh Mallya, senior research analyst with Angel Commodities Broking.
Of late, Iraq has begun supplying crude oil two to three million barrles a day of crude oil to the world market. Crude prices are going up, amid fear of supply disruptions; they’re unlikely to cool soon. Base metals, apart from nickel, are trading higher on the back of favourable industrial production data from China, coupled with weakness in the dollar index. However, a mixed trend in London Metal Exchange inventories, along with weak market sentiment, capped sharp gains.
In the Indian markets, base metals are trading higher on account of rupee depreciation. The rupee depreciated to close on Friday at 59.77 as compared to the previous close of 59.26 against the dollar. Positive Chinese industrial production numbers is set to keep base metals' price elevated. China’s Industrial Production rose to 8.8 per cent in May as compared to a rise of 8.7 per cent in April.