Gold has surpassed all previous records; the commodity touched $1,293 per ounce on Wednesday, gaining 4 percent in September alone and has risen around 15 percent this year.
The yellow metals rally has started bearing down in the local market as well, as the price of 10 gram bar advanced to Rs35,271 on Thursday, from Rs33,942 at the start of this month, high enough to keep buyers at a distance from jewelry shops.
This weeks spark in global gold is being attributed to the pessimism about the US economy, as the Federal Reserve has hinted at further monetary easing if and when the economic recovery cools.
The statement from the U.S. Federal Reserve sent the euro to a five-month high against the dollar, at $1.336, up from $1.305 on Monday. Investors also started flocking to other precious metals; silver advanced to $21 per ounce, a 30-month high-since March 2008, while platinum also hit a four month high to $1,632 per ounce.
As clouds of uncertainty continue to hover over the US and euro zone, along with stronger seasonal gold demand from China and India, analysts are optimistic about the outlook of yellow metal - aiming at $1,300 an ounce very soon.
In keeping with the current market scenario, BNP Paribas, this week, raised its forecasts for gold to average $1,200 an ounce in 2010 and $1,290 an ounce in 2011. While earlier this month, market strategists, Jochen Hitzfeld, an analyst at UniCredit SpA in Munich raised his 2011 estimate for the metal to $1,400 an ounce, from $1,250.
Analysts predict gold investment demand to remain strong in the last quarter, driven by festive buying in several Asian countries, primarily from India, the worlds largest buyer. This means that even if gold retreats from its current value, physical demand from Asian countries will put a floor under gold.
However, caution is urged for investors interested in metal buying for one of the worlds investment guru has become wary of late. "I called gold the ultimate bubble which means it may go higher but its certainly not safe and its not going to last forever", George Soros forewarned international media earlier this month.