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From The Hindu.

Business
Gold prices at record high of Rs 6,400
Mumbai, Jan. 6. (PTI): Gold prices zoomed up further to close at a historic high of Rs 6,400 per ten gram, while silver skyrocketed up by Rs 275 per kilo to end at yet another all-time high of Rs 9,880 per kilo on the bullion market today.

Attributing the steep rise in gold prices to firm global advices, dealers said in London, gold was fixed in the morning at $428 per ounce while in Asia, it had touched $425 per ounce, a level not seen since December 1988.

In Hong Kong, the yellow metal closed sharply firm at $424.20-424.70 per ounce as against the previous close of $417.20-417.70 per ounce.

In the local market, pure gold (99.9 purity) resumed firm at Rs 6,340 and continued to rise smartly on heavy stockists' demand, before closing at a new record level of Rs 6,400, showing a huge rally of Rs 130 over the previous close of Rs 6,270.

The same trend was seen in standard gold (99.5 purity) as well when the metal resumed firm at Rs 6,300 and shot up in line with pure gold and closed at an all-time high of Rs 6,360, showing a similar gain over yesterday's close of Rs 6,230.

Ready silver (.999 fineness) commenced strong at Rs 9,790 and shot up further on increased industrial and stockists' buying and closed at Rs 9,880, revealing a whopping Rs 275 rally over the last close of Rs 9,605.

From Bloomburg.

Gold Reaches 15-Year High in London as Dollar Drops Versus Euro
Jan. 6 (Bloomberg) -- Gold rose to its highest price in more than 15 years in London, after the dollar fell to a record against the euro for a second day and as the threat of terrorism made the metal more attractive as a haven.

Gold for immediate delivery was trading up $3.80, or 0.9 percent at $428.20 an ounce in London as of 9:55 a.m., the highest since Dec. 5, 1988. The euro was up 0.4 percent at $1.2724, after climbing as high as $1.2733, bolstering the appeal of bullion in Europe.

Prices of gold jumped more than 19 percent last year, partly because of a 19 percent slide in the dollar against the euro. Some investors buy gold as a hedge against a falling dollar. Also, gold is priced in dollars, so it becomes cheaper for holders of other currencies when the U.S. currency weakens.

``Gold has continued its incredibly strong end to the year, driven by the strength of the euro and weakness of the U.S. dollar,'' Kamal Naqvi, an analyst at Barclays Capital in London, said in an e-mailed report.

Fears of a terrorist attack are also boosting gold prices, analysts said. The U.S. raised its national terrorism alert level to ``orange'' for high risk on Dec. 21, the second-highest level on a five-color scale. Yesterday, the nation also began fingerprinting and photographing visitors who require visas for entry.

British Airways Plc, Europe's largest airline, delayed a flight from London to Washington yesterday at the request of U.S. intelligence officials. It held back the same flight on Saturday and Sunday. Air France SA and Aerovias de Mexico SA planes to the U.S. were also grounded over the Christmas and New Year period.

Gold often rises in times of turmoil, when it's seen as a safe investment. Prices jumped 5.4 percent on Sept. 11, 2001, the day of the terrorist attacks in New York and near Washington, D.C.

On Sunday, the Arab television network al-Jazeera broadcast a tape said to be from Osama bin Laden, the fugitive terrorist leader of al-Qaeda, the group responsible for the Sept. 11 attacks. The voice referred to the capture last month of former Iraqi leader Saddam Hussein, suggesting the recording was made recently.

The dollar's drop against the euro came after Atlanta Federal Reserve President Jack Guynn suggested yesterday the Fed won't raise interest rates, currently at a four-decade low, anytime soon because of signs inflation will remain tame.

Continually low interest rates may further weaken the dollar. They make it harder for the U.S. to attract investment from overseas to finance a record budget deficit and its third- largest current account shortfall. They also make gold more attractive as an alternative investment. The Fed's 1 percent target rate is half that of the European Central Bank.

Among other precious metals for immediate delivery in London, silver advanced 4 centS, or 0.6 percent, to $6.25 an ounce and platinum gained $5.50, or 0.7 percent, to $846. Palladium slipped $1.50, or 0.7 percent, to $201.

Last Updated: January 6, 2004 05:22 EST