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Global gold prices shoot up: Indian market follows trend

Gold prices shot up in India's bullion market today following its robust trend in overseas bullion trade.

In Bombay, ten tola gold biscuit's price skyrocketed by Rs 1,000 to Rs 48,500, while standard mint and 22-carat gold prices zoomed up by Rs 100 and Rs 95 to Rs 4,150 and Rs 3,840 respectively, following heavy short-supply of the commodity, induced by bullish sentiments abroad.

The spot gold prices continued to soar in Europe today with the rally fuelled by fund short-covering in the wake of Britain's second gold auction. Gold traded as high as $264 a troy ounce in London, more than $ 3.50 higher from the previous close.

Back home, prices of silver .999 shot up sharply by Rs 105 to Rs 8,075 and raw silver by Rs 115 to Rs 7,955 per kg on sustained brisk seasonal demand from local dealers and industrial users.

Sellers were inactive due to strong global and upcountry advice coupled with poor arrivals.

Traders attributed the sharp rise in the precious metals to the recently conducted gold auction by Bank of England.

Today's closing rates: were Silver (per kg) .999 Rs 8075 (yesterday it was Rs 7,970); raw Rs 7,955 (Rs 7,840); gold (per ten grams) standard mint Rs 4,150 (Rs 4,050) and 22-carat Rs 3,840 (Rs 3,745 nominal); gold biscuit (per ten tola) Rs 48,500 (Rs 47,500)

In Hong Kong, Asia spot gold closed higher on Wednesday on late buying from Europe after Britain's gold auction on Tuesday boosted prices to one-month highs.

Bullion ended at $262.60/263.10 an ounce, up from New York's $ 260.40/90 close on Tuesday. It opened here at $260.20/70.

''The price extended overnight rises by more than $2 after Britain's central bank sold 25 tonnes of gold in the second of a series of auctions,'' said a dealer at a local securities house.

The Bank of England's second of five gold auctions fetched a higher than expected $ 255.75 per troy ounce for 804,000 ounces of gold. The sale was 8.0 times oversubscribed.

''The gold market has continued upward interest and I think the price could test $ 265 levels,'' the dealer added.

Spot silver ended at $ 5.24/27 an ounce, unchanged from New York's Tuesday close.

Local gold ended HK$ 66 higher at HK$ 2,427 a tael.

The carry-over charge at the Chinese Gold and Silver Exchange Society dropped to nil from its previous fix at "1.00.

In Berne, Switzerland, the International Monetary Fund is considering selling more than the 10 million ounces of gold it originally planned to use for poor country debt relief, a Swiss finance ministry official said on Wednesday.

''Consideration is ongoing about selling more than just the 10 million ounces,'' Giorgio Dhima, the Swiss official in charge of negotiations with the IMFm told reporters.

He made clear that any gold in excess of 10 million ounces would be part of the off-market revaluation plan already under consideration.

He declined to comment on reports that the IMF was discussing selling 14 million ounces of gold.

Growing international support for the IMF's proposed gold sale last March knocked several dollars off the gold price, prompting criticism from miners' organisations and major producer nations such as South Africa that the plan would damage those it aimed to help.

Under threat of a US congressional veto, the IMF opted instead for an off- market operation based on revalued reserves, taking advantage of the gap between the price at which it values the metal and prevailing market prices.

In London, gold fixed at $262.60 a troy ounce on Wednesday, its highest fixing level since early July as a sharp rally continued in the wake of Britain's second gold auction.

The fix was sharply higher from Tuesday's afternoon fix at $ 258.85 and the highest since July 2 when gold fixed at $ 263.10.

Bullion has risen some 2 per cent since Tuesday's sale of 25 tonnes fetched $255.75 an ounce, releasing pent-up demand and sparking a sharp rise from recent 20-year lows.

Dealers said the short-covering and fund buying seen during New York trading after the UK auction on Tuesday had continued during Asian business.

Breaches of resistance at $ 262.00 and $263.00 an ounce, after technical selling emerged at these levels, left 265.00 the next major obstacle, one London dealer said.

Spot gold was last quoted at 262.50/ 263.00, up from the New York close of 260.40 260.90.

In European markets, gold prices climbed sharply in early trading on Wednesday, recovering all their losses of the past two months as Tuesday's Bank of England auction reinvigorated the depressed market.

The price has now swung sharply back to the levels seen immediately before Britain's first sale of its official gold reserves on July 6, which pushed the metal down to 20-year lows.

The second auction on September 21 was eight times oversubscribed, though, and the unexpectedly high level of demand gave a strong boost to a market.

Having gained close to $5 an ounce on Tuesday after the results came through, gold reached higher still in early business on Wednesday, easily breaking through the $261.20 achieved at the first auction and touching a bid high of $ 263.90.

''There was huge fund buying and short-covering in New York and the fund buying continued in the Far East,'' a dealer in Germany said.

At 0730 GMT, gold was quoted at $263.75/264.25, up $3.35 from the New York close of $260.40/90.

''I've been disappointed with gold so many times before, but I do expect we'll see a rally,'' said analyst John McDonald of CIBC World Markets on Wednesday.

The first British auction, which took place against a background of other central bank sales over recent months and the threat of sales from the IMF, had dragged gold to multiple 20-year lows that bottomed at $251.70 on August 25.

But after July's UK sale, the IMF scrapped its controversial plans and is opting instead for an off-market operation based on revalued reserves.

The Bank of England sold 804,000 ounces of gold on Tuesday at $255.75 an ounce, slightly above dealers' expectations.

Britain plans to cut altogether 415 tonnes from UK holdings, with the next two auctions to be held on November 29 and January 25, 2000.

UNI/Reuters

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