Gold races towards Rs.27,000 mark on safe-haven rush

Gold prices rushed to an all-time high of Rs.26,915 per 10 gram in Mumbai on Thursday, riding on a spurt in safe-haven buying as economic concerns triggered a plunge in equities around the globe. The yellow metal, which has gained Rs.3,655 since the start of this month, ended the day up 1.48%. Experts see the commodity breaching the Rs.27,000 mark in the short run. "We expect gold prices to cross Rs.27,500 mark in the short term, whereas it is expected to touch Rs.28,000 in the long term," said Chirag Sheth, assistant vice-president, Latin Manarlal Commodities Pvt Ltd. Gold could hit $1,900 an ounce in the next six months, driven by buyers seeking an investment safe from global economic problems, but a further rise to $2,000 looks unlikely, metals consultancy GFMS said on Thursday. Others see prices consolidating a tad below the current levels. "Gold prices may consolidate to `26,500 as the dollar is expected to strengthen in the near future," said Naveen Mathur, associate director- commodities & currencies, Angel broking. Interestingly, demand for gold had fallen 17% in the June quarter to 919.8 tonne as global investment demand declined by a sharp 37% to 359.4 tonne. Recycling activity, wherein gold is sold in the market, stood at 429.3 tonne, down 3% year on year. "Last year, the total gold recycled was 81 tonne but, by the end of this year, we expect that number to go down by almost 50%," said Ajay Mitra, managing director, India & Middle East. Till June, only 20 tonne gold had been recycled. "This dip is because people prefer to take gold loans than sell it in the market," said Mitra. Overall investment demand for ETFs, coins and bars was down just over a third in the second quarter, despite a 9% rise in coin and bar buying, which was driven chiefly by Asian purchasers. With agencies