Gold jumps by Rs 700 to eight-month high

Gold on Saturday scaled eight-month high of Rs 31,860 per 10 grams in Kolkata on strong buying trends after stocks and money markets melted.

Traders said upcoming festive and marriage season may further fuel demand for the precious metal pushing the prices higher. Gold rose by Rs 700 to Rs 31,760 in Kolkata, followed by in Delhi where it gained Rs 515 to Rs 31,525 per ten gram, the levels last seen on December 18, last year. In Chennai, gold climbed by 695 to Rs 31,505 and in Mumbai by Rs 640 to Rs 31,470 per ten grams.

On Friday gold had jumped the most in two years by Rs 1,310 due to meltdown in stocks and money markets. Rupee hitting record low of 61.65 per dollar and investors shifting funds from melting equities to bullion supported the uptrend, traders said. "Speculative buying picked up in anticipation of further rise in precious metals in coming days once the festival and marriage season starts," said Delhi-based bullion merchant Rakesh Anand.

The rally in precious metals sparked ever since rupee plunged to all-time low, raising fears the dollar-denominated metal would become costlier and restrict supply into the market after RBI prohibited inward shipment of gold coins. "Melting equities and depreciating rupee have left no other option for the investor fraternity but to park their funds in bullion," said Surender Jain, Vice President of All India Sarafa Bazar.

Restricted supply after government increased import duty on the metal to 10 per cent on August 13 and firm global cues supported the upsurge in the metal, he added. The latest measures by RBI and the government are part of a series of steps taken to curb gold import, a major contributor to the widening current account deficit. The RBI also prohibited inward shipment of gold coins and medallions without licence. Globally, gold climbed to two-month high to 1,379.20 dollar an ounce on signs of higher physical demand for precious metals.