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Gold prices pushing 7K; is correction due?

Our Bureau

Mumbai , Nov. 12

INDIAN gold prices moved up to a high of Rs 6,995 per 10 grams, tracking the overnight surge in bullion prices in New York.

The standard gold price ended higher by Rs 35 at Rs 6,995 and gold .999 made a similar gain to close Saturday's session at Rs 7,035 per 10 grams in Mumbai's bullion market.

Gold futures ended at $468.60 per ounce on the Comex division of the New York Mercantile Exchange on Friday on the back of strong demand. India, the world's largest gold importer, is currently in the midst of the wedding season. However, the domestic trade demand for gold today is slack, as dealers expect a correction in prices next week, Mr B. N. Vaidya, a bullion analyst, said.

Demand for gold, which is mostly consumed in the form of jewellery, is strong during the wedding season. But demand does tend to be price elastic to a large extent.

Internationally, gold has been rising on the back of concern about inflation, periodic terrorist attacks and the recent riots in France. Gold is often seen as a hedge in times of difficulty, economists say. In recent times, high crude oil prices have been fuelling speculative demand for gold as a hedge against inflation.

"However, a correction in gold prices is expected on the global markets. For one, crude prices have been edging down. Paris riots are also not as bad as they were," Mr Vaidya said. Crude prices have fallen to $58 a barrel at the end of this week.

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