Mumbai, Aug 24 (IANS): Prices of gold tend to move in the opposite direction of equities. This trend, to an extent, appeared to have played out on Monday, where despite the 1,625-point crash of a major equity index, some gold exchange traded funds managed to log good gains.
On the National Stock Exchange, out of the 13 Gold ETFs, seven of them ended in the green on Monday, led by the one floated by Canara Robeco, which was up Rs.45.10, or 1.79 percent, at Rs.2,560.
On the flip side, the Gold ETF floated by Birla Sun Life was down 2.92 percent, or Rs.74.45 at Rs.2,475.
The gold ETF turnover in NSE on Monday was Rs.16.12 crore.
"Gold is largely denominated in US dollars. The main reason why the yellow metal has gained is the rupee is depreciating against the US dollar," and gold is largely denominated in US dollar," said Naveen Mathur, associate director for commodities and currencies, with Angel Broking.
"Hence if the Indian rupee depreciates, the value of gold will go up and eventualy prices will be higher," Mathur told IANS, explaining how gold ETFs, which are a dematerialised form of the physical metal, made smart gains on Monday.
He also said internationally gold prices have been higher for the past few of days due to global economic uncertainty, led mainly by worries over the Chinese economy. "In an uncertain economic situation people started looking at gold as a safe haven," he added.
Even physical gold rose on Monday.
Prices in the global markets closed at their highest level in some seven months. This time, the investors pulled out of riskier stock markets -- that saw a key Chinese index shed around 8.45 percent -- to shift to gold and similar so-called safe investments.
"Today was a turbulent day for equities. Rupee depreciated, hence gold prices went up. There can be some kneejerk movement in gold in the coming 10-15 days. Prices may even shoot up by another Rs.1,000," Rahul Gupta, director, PP Jewellers, told IANS.
The prices of physical yellow metal (24 carat) was trading at Rs.27,500 per 10 gram in the Indian capital. Gupta said: "Globally many stock markets are down. In that case money should flow into gold now."