Glitter of gold has outshined all other investments since the meltdown started last October. Deepening worries over global economic outlook has sparked off a rally in gold prices which rewarded investors with 26% return in just hundred days.
Large funds and investors are shifting their moolah to gold, always a safe bet. Since October 10, 2008, gold prices in the domestic markets have moved up by nearly 26% to Rs 14,268 per ten gram, while the benchmark sensex has shown just 4% gain during the same period. Silver prices too have chased the gold prices and it has gone up 22% to Rs 19,752 per kg.
Analysts firmly believe that large investors and hedge funds are dumping other investments and diverting their funds to the yellow metal on fears that the recession would cut deeper than anticipated.
"Prices of all commodities have gone down, except for gold and silver. Investors in global markets are largely parking their funds in gold to protect the value of their money," said Naveen Mathur, head of commodities, Angel Broking. The top five gold exchange traded funds (ETFs) of the world have increased their gold reserve by 108 tones in the past three months. The total holding of these five ETFs has gone up from 972 tones to 1080 tones.
However, rising gold prices have pulled down imports of gold in the country, as retailers are staying away from making fresh buying at these levels. India's average import of the gold is around 50 tones per month but it dipped to just two tones in January 2009, said Devarsh Vakil, analyst with Anagram Comtrade.
Ref: EconomicTimes
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