By Manasee S. Gokhale
Well, Russia did it, so has China and now India has also followed suit. With the Reserve Bank of India (RBI), recently buying 200 tonnes of Gold from International Monetary Fund (IMF) at a value of $6.7 billion shows India’s desire to diversify in to other reserve assets. Most are slready cheering this move as in less than a month now the purchase has already yielded a notional gain of whopping Rs. 1,544 crore.
The average price of RBI’s purchase has been $1,045 per ounce and Gold prices today already record more than $1100 per ounce. The Central Bank’s move clearly suggests that it wants to diversify the large dollar holdings in order to protect against the weakening currency.
Reserve Bank of India (RBI) holds total foreign exchange reserves of $286 billion, of which gold comprises $10 billion. With the latest purchase, the RBI’s gold holding has increased from 358 tonnes to 558 tonnes, posting 55% rise in its gold reserve.
Oil, dollar and the stocks
Oil fell and so did the dollar. The U.S. dollar index fell as the previous day’s mood of risk aversion reversed back to risk taking and urged market participants to invest in higher yielding assets.
Oil also fell after poor economic data reinforced this week’s worries over poor energy demand. Treasuries rose on concerns over today’s mostly disappointing economic data. The Dow, Nasdaq, and S&P rose on confidence over the economic earnings report.
Gold News
Gold opened at $1107.25/1108.25 an ounce in New York and then wider than expected U.S. trade deficit caused equity markets to fall and then Gold followed. It didn’t stop till it reached an intraday low after which it later turned bid on the back of a falling dollar and was bought well. It then climbed higher and the metal continued to climb as the session progressed to reach an intraday high to reach $1117.50/1118.50 an ounce.
AS the session came to an end the metal closed at $1116.00/1117.00 an ounce.
Silver, when it opened at $17.23/17.26 was well offered in the early trading hours, but fell in the later session. Later, as the dollar tumbled and equity markets rallied, silver recovered from its lows and good buying took it higher. Goof investor demand carried the metal to an intraday high of $17.42/14.45 an ounce. Finally, amidst much profit booking the metal went down to settle at $17.36/17.39 an ounce.
