Gold prices of Wednesday crossed the Rs 16,500 mark for the first time on the bullion market here on hectic stockists buying triggered by a sharp rise in the overseas market. Gold prices in India could go up to Rs 18,000 per 10 grams before a recovering global economy once again pulls money towards riskier asset in the quest for higher returns, analysts said.

In the international market — that guide the domestic markets — prices rose to a record high of above $1,094.40 an ounce due to aggressive buying.

In India, standard gold (99.5 purity) soared by Rs 390 per 10 grams to close at Rs 16,630 from Tuesday’s closing level Rs 16,240. Pure gold (99.9 purity) also shot up by a similar margin to end at Rs 16,715 per 10 grams from Rs 16,325 on Tuesday.

The yellow metal, which was on a rising spree over the last few sessions, gathered momentum after the RBI purchased 200 tonnes of gold from the IMF. “Lack of credible investment alternatives and global economic uncertainty have ensured that, not only retail and HNIs, but even governments are looking at investing in gold. A consistently weak US dollar (against the euro and yen) has forced countries like India and China to have their forex reserves hedged by diversification leading to increased demand,” said Religare Commodities president Jayant Manglik.

In the absence of sustained stability in other assets, a lot of investment money globally is moving towards gold. Since almost all gold is imported and denominated in US dollars, the rupee prices is set to increase in line with international prices. “Interestingly, real demand has not fallen in spite of high prices. Demand has increased with more exchange traded funds being launched and buying physical gold. The trend is likely to continue globally as well as in India. If the rupee weakens against the US dollar to Rs 49 or Rs 50, the price of gold in India will shoot up proportionally,” Manglik said.

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