Bullion: After weeks of tremendous selling pressure

Bullion: After weeks of tremendous selling pressure, gold staged a resounding comeback from its multi-year low during the holiday-shortened trading week as jewellery traders and retailers ramped up demand ahead of the peak festival season. The yellow-metal broke its seven-week descending trend - longest retreat since 1999 - and witnessed a spectacular rebound to revisit the psychologically significant Rs 25,000 milestone following frantic buying at low levels in the face of a firming trend overseas.

Highly positive overseas sentiment as an aftermath of the China's dramatic devaluation of its tightly controlled currency and subsequent sell-off in financial markets worldwide mainly provided positive impetus for the turnaround in precious metals. Jewellery stockists and retail buyers seized the opportunity to restock gold in anticipation that the demand will improve considerably in coming days ahead of peak festive season as well as wedding-related demand. Depreciating rupee value in the midst of escalating currency war in the Asian region, further buoyant the sentiment.

Gold has been under intense panic selling pressure in recent weeks and witnessed a near-term rout amid a flash-crash worldwide on strengthening dollar in the midst of Fed rate hike fears. The yellow-metal had crashed to a four-year low of Rs 24,590 during the July meltdown. Elsewhere, silver continued its strong recovery momentum and recaptured the key Rs 36,000 benchmark on heavy speculative demand along with strong industrial demand. 

In worldwide trade, the shiny-metal reclaimed the key USD 1,100-mark to end a three-week high, benefiting from traditional safe-haven asset, despite Fed rate hike fears. Heavy bouts of short-covering against the back drop of uncertainties and risks about the global economy after China unleashed a currency war to overcome its sliding economic activities also bolstered the sentiment. Industrial metal also topped the crucial USD 15-level.

In the New York commex trade, gold for December contract rose to settle at USD 1,112.70 an ounce from last Friday's close of USD 1,095.40 and silver for September delivery also firmed up to USD 15.21 an ounce, as against USD 14.935. On the domestic front, Standard gold (99.5 purity) opened substantially higher at Rs 24,805 per 10 grams against last Saturday's closing level of Rs 24,770 and continued its ascent to touch a high of Rs 25,755 before concluding at Rs 25,730, revealing a handsome rise of Rs 960, or 3.88 per cent.

Pure gold (99.9 purity) also resumed sharply higher at Rs 24,955 per 10 grams compared to preceding weekend's close of Rs 24,920 and surged ahead to a high of Rs 25,905 before finishing at Rs 25,880, showing a healthy gain of Rs 960, or 3.85 per cent. Silver ready (.999 fineness) commenced firm at Rs 34,780 per kilogram and powered ahead to end at Rs 36,620 from last weekend's closing level of Rs 34,680, registering a hefty jump of Rs 1,940, or 5.59 per cent per kilo.