Gold hits 28-year high as oil bounces towards record

Mumbai: Gold rallied to over $817 an ounce, its highest in nearly three decades as investors looked for safe-haven assets amidst worries in the US credit market and a falling dollar.

Spot gold hit an intraday high of $814.10 an ounce, its best level since January 1980, before slipping to $813.50/814.25 an ounce, higher than $808.80/809.60 late in New York.

Silver also hit its best level in almost 18 months to track gold''s strength. High prices sparked sales of gold scrap from Indonesia and Thailand to Singapore, a centre for bullion trading in Southeast Asia, but dealers also noted speculative buying.

Gold''s 14-day relative strength index (RSI) has risen above 70 as gold hits highs. It stood at 72.28 on Monday. The market views an RSI of 30 or less as oversold and 70 or more as overbought.

Gold is riding high on a struggling dollar after the Federal Reserve cut interest rates, record-high crude, Turkey''s threat of an incursion into Iraq to deal with Kurdish rebels and recently, fears that the US subprime mortgage crisis was worsening.

The benchmark contract in Tokyo gold futures rose above the closely watched 3,000 yen per gram level for the first time since July 1984. The October contract on the Tokyo Commodity Exchange ended 30 yen higher at 3,015 yen.

Gold prices in India surged to 18-month high on heavy buying by stockists and retailers for the festival season amid reports of the metal rising to record high levels in global markets
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Marketmen said the gold rising to 28-year high in global markets over $817 an ounce, a level last seen in January 1980, further fuelled trading sentiment and pushed up gold to a level recorded in May 2006 in India.

Standard gold, which commenced the day higher at Rs10,500 per ten gram, eased to close at Rs10,440, still showing a gain of Rs140. Ornaments also rose by Rs140 at Rs10,290 per ten gram while sovereign rose by Rs75 at Rs8,350 per piece of eight gram.

Silver ready recovered to conclude higher by Rs300 at Rs19,350 per kg on hectic buying triggered by firming trend in London bullion market. Silver weekly delivery shot up by Rs370 at Rs19,450 a kg on speculative support.