New Delhi: The yellow metal already touching new heights with the each passing day is expected to reach a massive landmark price of Rs 35,000 per ten grams in the festive season of Diwali.

The bullion market on Friday in the capital witnessed a historic rise of Rs 1,310 in gold prices taking it cross the Rs 28,000 mark. On the same day, owing to rapid growth in the foreign bullion markets, the yellow metal reached the peak of 1878.98 dollors per ounce in the international market.

Market analysts now forecast its price to surpass USD 2000 per ounce in the international markets. In the backdrop of lowering of American sovereign debt ratings and European Union nations threatened by debts, gold prices have plunged by a whopping 14 percent in the single month of August.

Proving to be the most sought out investment since past many centuries gold has become 400 percent expensive in the last decade providing much higher returns.

Reasons for rise

With debt crisis in Europe and America and fears of global recession in proximity, the demand for gold as a safe investment has increased manifold. Worsening economic situation in these nations is already creating ripples in the stock markets while extreme volatility is also visible in the foreign exchange market.  

Moreover, the weakening of dollar has triggered more buying in the gold market whereas excessive betting in future trade is leaving no stone unturned in instigating the prices.

The rising prices are expected to double the investment demand for gold Exchange traded fund (ETF) within a year. This electronic transaction of paper gold (buying gold on paper) has emerged as a fast catching trend unlike jewellery.
 
The country's total gold ETF investment has reached 15 tons while the trends are showing a similar rise in the American and European markets as well.

Chairman of Global Bullion Association Vimal Goyal has said, “The soaring gold prices are here to stay as jewellers are busy collecting gold for the approaching festive and wedding season. Better middle-class incomes, increasing young generation and improving rural economy will never let down the demand for gold.”

According to the latest World Gold Council (WGC) report, there will be around 1.5 crore marriages in the coming few decades. Still, three-fourth of gold in India is bought for wedding purposes which will keep on contributing in the rising gold demand and its soaring prices.

Gold imports in the first six months of the year has already exceeded 553 tonnes and is expected to cross 1000 tonnes in the end of 2011. According to the WGC, India's gold import in 2010 was 958 tons.

(JPN/Bureau)