Gold may hit a four year low

London: Gold prices have probably peaked this year and could sink to their lowest since 2010 at $1,100 an ounce as the US economic recovery gathers pace, consultancy Metals Focus said on Wednesday. An ounce is equivalent to 28.35 grams, which could translate $1,100 into Rs 66,066 an ounce or Rs 23,303 per 10 grams.

Weakness is likely to set in after an impressive start to the year, it said, when gold rallied to six-month highs. But a replay of last year’s 28 per cent plunge, triggered by the US Federal Reserve’s tapering of extraordinary stimulus measures, is not on the cards.

The consultancy also forecast that an eventual easing of tensions in Ukraine would add to a bearish trajectory for the market. “In the short term, the US recovery regaining momentum (thanks to improving weather conditions) and the eventual de-escalation in Ukraine are likely catalysts for lower prices,” it said in its Gold and Silver Mining Focus 2014.

“Meanwhile, the Fed’s ongoing reduction in its bond purchases, easing concerns about fiscal situations on both sides of the Atlantic and low inflation are all headwinds for the yellow metal for the rest of 2014.”

Robust demand from the major physical gold markets in Asia should help offset Western investors’ lingering caution in gold futures, derivatives and exchange-traded funds.

Chinese demand, which surged last year as prices fell, will remain strong, it said, though below the 2013 level.

That, along with strength in retail demand in Western markets, helped drive a 35 per cent surge in physical investment last year to 47.1 million ounces.

Jewellery consumption also rose 22 per cent to 81.7 million ounces, while the volume of scrap gold returned to the market fell 26 per cent to 39.3 million ounces. The consultancy expects silver prices to average just under $20 an ounce this year, not far from current levels but well below last year’s average of around $23.80 an ounce, as its fundamentals weaken.

Gold soars in india on wedding demand

Mumbai: Gold prices rose modestly on the domestic bullion market on Wednesday due to renewed off-take from jewellery stockists as well as seasonal demand supported by higher global sentiment.

Silver also gained on fresh industrial buying support. Standard gold (99.5 purity) firmed up by Rs 70 to end at Rs 30,080 per 10 grams from Tuesday's closing level of Rs 30,010.

Pure gold (99.9 purity) also moved up by a similar margin to finish at Rs 30,230 per 10 grams as compared with Rs 30,160 previously. Silver (.999 fineness) added '25 to conclude at Rs 43,465 per kg from Tuesday’s close of Rs 43,440.

Globally, the metal rallied to three-week highs on disappointing US trade data and worries about escalating violence in Ukraine amid lower dollar valuation. (- PTI)