Gold prices on Thursday zoomed to a five-week high rising by Rs.430 to Rs.28,090 per 10 gram here on increased stockists buying, following government decision to hike import duty on the precious metal amid firm global cues.
The trading sentiment bolstered as government decided to increase import duty on gold from 6 per cent to 8 per cent to curb a record current account deficit at a time when the World Gold Council predicts record quarterly demand for the metal in India.
A firming trend in overseas markets on strong dollar and investors shifting their funds from melting equities to bullion further influenced trading sentiment.
Gold in international markets gained as a private jobs report showed U.S. companies hired less workers than projected in May, spurring speculation that the Federal Reserve would keep buying bonds.
Gold in New York rose by 0.19 per cent to $1,402.70 an ounce. With the general firming trend, silver also advanced on rising demand from industrial units and coin makers.
“The immediate impact of the gold duty cut is that the demand for the metal would shrink. Anticipation and speculation in gold will come down... Now gold will not remain attractive as an investment option,” said C. P. Krishnan, Wholetime Director with Geojit Comtrade. He said gold prices overseas were likely to hit $1,500 an ounce by 2014. On the domestic front, gold of 99.9 and 99.5 per cent purity shot up by Rs.430 each to Rs.28,090 and Rs.27,890 per 10 gram, respectively, a level last seen on April 29.
Sovereign added Rs.100 to Rs.24,200 per piece of eight gram. However, silver ready fell by Rs.60 to Rs.44,540 a kg and weekly-based delivery by Rs.10 to Rs.43,970 a kg. Silver coins spurted by Rs.2,000 to Rs.79,000 for buying and Rs.80,000 for selling of 100 pieces.