Gold prices likely to surge to new highs by Diwali. According to analysts, gold prices might cross Rs 40,000 mark, per 10 gram around the festival.
In Delhi, gold of 99.9 per cent and 99.5 purity on Friday surged Rs 475 each to Rs 38,420 and Rs 38,250 per 10 gram, respectively. Sovereign gold held flat at Rs 28,700 per eight grams.
Usually, the high demand for gold reflects the expectations about the future, the prices of precious metal tends to rise amid global growth concerns or political upheaval.
Anuj Gupta of Angel Brooking told IANS, "Gold prices were surging primarily owing to the decline in global growth rate". Gupta further predicted that gold prices will hover around Rs 39,000 to Rs 40, 000 per 10 gram by Diwali.
"We now recommend all investors have a full allocation to precious metal investments in their portfolio," said a Gohring and Rozencwajg report.
High gold prices have hit demand in India--the second-biggest consumer of the precious metal in the world. According to the latest data, gold imports to India slumped 42 per cent to $1.71 billion in July. Jewellers have reported a higher supply of scrap gold as consumers sell their old jewellery, prompted by higher prices.
Lower interest rate by central banks and the ongoing trade dispute between the US and China are the other factors that have supported the gain in gold prices.
Besides, the latest worry came over the recession warning via the bond market. The inversion in the US bond yield hit levels last seen in 2007, just ahead of the global financial crises.
(With IANS inputs)