Price of gold in India over 28,000 rupees

India's gold price is on the rise due to continuing capital flight among domestic investors into safe havens such as gold. The yellow metal exceeded the mark of 28,000 rupees per 10 grams for the first time ever in yesterday´s trading session.

Rising volatility in global equity markets has had a negative impact on India's benchmark Index Sensex, which lost 108 points on Monday and closed at 16,710 points. Domestic investors are selling stocks in order to reallocate their portfolios and transfer large amounts of capital into safe havens such as precious metals. Yesterday, the gold price rose to 28,160 rupees per 10 grams in Mumbai (Bombay), and exceeded the 28,000 mark for the first time. Fears are growing that global investors will continue to withdraw from international markets, the rupee suffered the consequences in currency markets. The Indian rupee lost ground again and closed yesterday at 45.99 USD.

Weak US economic numbers have put global equity markets under pressure in the past weeks. Even emerging markets seem unable to withstand concerns among investors who expect the world economy to slip back into negative growth. Precious metals have not only benefited from growing fears in financial markets, the impending festival season, which starts with the Diwali festival of lights in October, is expected to further boost purchases of physical gold and silver among Indians.

Iran´s central bank also announced that their gold reserves have tripled in dollar value thanks to the rising gold price. Iran invested $13 billion of their foreign exchange reserves in gold 3 years ago, to prevent their assets at foreign banks from being frozen. Central bank chief Mahmoud Bahmani said that his institution acquired most of these gold reserves at a price of $656 per troy ounce. The gold price has since tripled to $1,900 per troy ounce. Bahmani described calls for sanctions by U.S. Congressmen as a big bluff. The US block on Iranian foreign accounts was an attempt to prevent the sale of Iran's oil for gold or other currencies apart from the US dollar, Bahmani added.