Gold Surges To Six Month Highs, Rally Sustaining

London (mar 12)  Gold soared to six-month highs as weakness in US dollar and continued geopolitical worries boosted the safe haven appeal of the metal. The gains in the last few days have now pushed the COMEX Gold futures more than 13% in the current year. The MCX Gold futures also topped highs above Rs 30500 today and currently trade at Rs 30477, up Rs 230 or 0.76% on the day. The open interest is up by an impressive 5.22% on the day. 

Equities slipped amid continued worries over slowing Chinese growth and simmering tensions over Ukraine. Copper slipped to four year lows and crude also stayed under pressure. Investors are also worried that political tensions between Russia and Ukraine will intensify as the March 16 referendum on whether Crimea should belong to Russia draws near. Major indices in Asia and Europe slipped around 1 - 1.5% in the trade today. 

Meanwhile, the Strategic gold reserves of Azerbaijan will be established until the end of the year, Executive director of the State Oil Fund of Azerbaijan (SOFAR) Shahmar Movsumov stated, according to media reports. We can invest in gold up to five percent of the assets. Earlier a strategic decision was made on the purchase of 30 tons of gold in the next two years. Twenty tons of this volume has already been delivered to the country, and the remaining part will be delivered during the year, he noted. 

US dollar dropped to a two and half year low against the Euro last week and quotes just below that mark right now. This is supporting gold though other commodities seem to be following the economic undercurrents. Gold also seems to be benefiting from the fact that the near 30% drop in 2013 bought the metal near to the cost-of-production levels for some gold miners.

Source: IndiaOnline