May 3: Rupee and gold displayed mixed fortunes today with yellow metal prices shining at record highs and the Indian currency precariously poised at a four-and-half month low.
Gold broke all previous records to trade at Rs 29,695 per 10 gram in Delhi, while the rupee’s value against the dollar declined to four-and-a-half month low of 53. 42.
Gold prices (New Delhi) had been rising for 10 consecutive sessions up to April 30, tracking cues in global markets where alternative investment options such as stocks have been steadily declining on the emergence of macroeconomic data from the US and Eurozone amid a weak dollar.
Analysts have been projecting the precious metal touching Rs 30,000 levels soon.
Commenting on the rising prices, Lakshmi Iyer, head of product and fixed income, Kotak Mutual Fund, said, “The ongoing marriage season could have played a role. The rupee fall could have enhanced the value of domestic gold prices, too.”
In Calcutta, gold hardened by Rs 35 to finish at Rs 29,740 from Wednesday’s closing level of Rs 29,705. Traders said domestic gold prices raced to record high levels even though globally the yellow metal prices were down.
Meanwhile, continuing its steady fall, the rupee came close to the 54-level against the dollar intra-day but recouped some losses on suspected RBI intervention. It finally ended at 53.42, a hefty loss of 45 paise.
The price of gold is generally inversely related to the value of the dollar. This means a stronger dollar tends to keep the price of gold lower.
Spot gold in the US today was down nearly 1 per cent at $1,638.51 an ounce, having recovered somewhat from its intra-day low of $1,625.89. Similarly, US gold futures for June delivery were down $15.10 an ounce at $1,638.90. “Demand for physical gold in India remains low. The rise in rupee-denominated prices is a reflection of the rupee-dollar rate,” said C.P. Krishnan, whole-time director, Geojit Comtrade.