MUMBAI: Spot gold prices hit a record high on Friday tracking overnight gains in the world market and on a weak rupee, dampening demand and boosting scrap supplies. Spot gold prices in Mumbai moved above Rs 31,000 per 10 grams for the fist time on Friday morning, although they eased a bit in the afternoon, taking cues from a similar trend on the world market.
Global gold eased from a 4-1/2 month high but was still poised for its biggest weekly rise in more than two months. The most-active gold for October delivery on the Multi Commodity Exchange ( MCX) was trading 0.14 per cent higher at 30,847 rupees by 0930, after hitting a record high of Rs 30,870 earlier in the day.
"There is hardly any activity in the spot market. Buyers are hoping prices will come down. They are waiting," said a Mumbai-based dealer with a private bank dealing in bullion. "Jewellers are cautious. It is difficult for them to judge the impact of price rise and weak monsoon on their festival sales. Besides, they are also getting scrap due to price rise."
The flow of scrap gold rose as people sold their old jewellery for handsome returns, jewellers said. Gold prices in India have nearly trebled in three years.
The country is facing its second drought in just four years, which can drive up food prices and cut spending power, crimping demand for goods from tractors to gold. The rupee, which determines the landed cost of imported gold, eased on Friday.
Gold imports during the peak demand season of September to December could fall 40 per cent on year to 200 tonnes, the head of a trade body said earlier this week.
