Last Updated : 03 November 2009 at 17:05 IST

India bullion body says gold may touch Rs17000

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MUMBAI (Commodity Online): Despite a sluggish demand for Gold in the Indian market due to high prices, the yellow metal price is expected to touch Rs 17000 mark in the December 2009, said Ashwin Derasari, a gold expert and senior official of Bombay Bullion Association.

Gold price is soaring abruptly in the global market because of weak US dollar. There are key factors, which impact gold prices globally, dollar is such an element that boost gold price at present, he said.

In spite of high gold prices in India, the buying surged unexpectedly during Diwali and total purchases by country’s costumers were stood at 57 tonne in October.

However, with the expectation of a subdued demand during November 2009, gold imports during the month of October were lower at about 37.5 tonnes compared with 70 tonnes during the month of September, Derasari said.

Persisting weakness in US dollar is expected to take gold prices further up in the long term. Meanwhile, some experts said, though, gold prices would soar in the long run, the dollar would stabilise in the short run and the gold prices would consolidate.

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Gold bulls continue to triumph as the traders are buying the yellow metal on ideas that prices are headed for a further upsurge as rising interest rates fretted investors that impending economy recovery may be in for a grinding.

Surprising the markets yet again, the Reserve Bank of Australia today raised its policy cash-rate target a quarter of a percentage point to 3.5%, on the heels of an equal rate-hike last month.

The positive array of economic data releases is supporting the markets and in turn pushing Gold up too- making it behave like a typical risky asset. However, this same link isn't working when other assets like equities and currencies pull back. Gold is getting supported then on its safe haven appeal.

According to one Mumbai based jeweller there was a revival in demand for gold jewellery during the Diwali festival, but now the physical buying of gold is negligible, primarily due to high prices.