(Update with analyst quote, background)
MUMBAI (Thomson Financial) - India spot gold surged by over 3 pct Wednesday
at opening to breach the 12,000-rupee mark, powered by an overnight rally in
international markets and a weaker rupee, market participants said.
Mumbai gold of 0.995 purity opened 365 rupees higher to hit a record high of
12,015 rupees per 10 grams while gold of 0.999 purity opened 365 rupees higher
at 12,070 rupees per 10 grams.
In London, gold rallied to highs of 929.15 usd an ounce yesterday as crude
oil prices closed over 100 usd a barrel, stoking inflation concerns. The rally
was aided by the weakness of the US dollar against major currencies.
Last month, the yellow metal hit a record high of 936.60 usd an ounce on the
back of a soft US dollar and mining disruptions in South Africa.
"We expect imports for the month of February to be at around 4-5 tonnes
looking at these record-high prices," said Suresh Hundia, president of the
Bombay Bullion Association.
This rally was also supported by a weaker rupee apart from strong global
cues, Hundia added.
According to an estimate from the Bombay Bullion Association, country's gold
imports slumped to 5 tonnes compared with 62 tonnes last January, as surging
prices put the metal beyond the reach of most Indian consumers.
India, the world's largest consumer of gold, imported 722 tonnes of the
metal in 2006.
Manqoba Madinane, commodity analyst at Standard Bank told Thomson Financial
News from Johannesburg: "We will see gold rising going forward on rising
investment appeal of the yellow metal and expectations of a rate cut by the US
Federal Reserve."
Madinane however added, there would bouts of corrections on its way up
largely due to lack of jewellery demand from India and also on increase in
recycled gold supplies on record high prices.
The World Gold Council recently said in a report that the country's
jewellery demand for the fourth quarter to Dec 31 slumped to 54 tonnes compared
with 165.4 tonnes a year earlier, as prices were volatile and reached record
highs of over 10,000 rupees per 10 grams.
Silver of 0.999 purity opened 475 rupees higher at 22,080 per kg.
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