After its biggest single day rise in two years yesterday, the precious metal advanced to a level last seen on December 18, 2012 due to tumbling rupee and stocks.
The rally in precious metals sparked after rupee plunged to all-time low of 61.65 against American currency, raising fears the dollar-denominated metal would become costlier and restrict supply into the market after the RBI prohibited inward shipment of gold coins.
Investors rushing to bullion as a safe haven following free fall in equities and forex further influenced the market sentiment. Firming global trend was another positive factor for the precious metals.
“Melting equities and depreciating rupee have left no other option for the investor fraternity but to park their funds in bullion,” said Surender Jain, Vice President of All India Sarafa Bazar.
Restricted supply after government increased import duty on the metal to 10 per cent on August 13 and firm global cues supported the upsurge in the metal, he added.
The latest measures by RBI and the government are part of a series of steps taken to curb gold import, a major contributor to the widening current account deficit.
Silver followed suit and shot up further by Rs 1,365 to Rs 50,685 per kg on increased demand from industrial units and coin makers.
Source : The Economic Times.