Continued skyrocketing gold prices after breaching all the levels, hit another all-time high of Rs 12,000 per 10 gram in the domestic market on Tuesday evening, mainly on the back of instability in the dollar, record high oil prices, ongoing confrontation between the US and Iran and rising demand of this precious yellow metal in the world markets, traders said.

They said that gold was quoted at $617 an ounce after touching a high of $618.25 per ounce on Tuesday evening. "Gold prices are going up because of concerns of high international oil prices mainly on the back of tensions between the US and Iran," said Tanvir Abid, Head of Institutional Sales at brokerage Live Securities.

He said that high international oil prices could lead to slowdown in the global economy and weaken the dollar. Senior traders and analysts said that the bears would not overpower the bulls and the recent trend in gold prices would continue in the coming days.

"I foresee that this precious yellow metal (gold) would reach $800 per ounce by June this year," Tanvir said. "I think people should still invest in gold despite high prices because it provides a safe haven in the time of uncertainty and crisis," he added. "There is a lot of speculations taking place by hedge fund managers, however, I also see a lot of genuine demand and that is why gold prices continue to go up," another analyst said.

Commenting on the future of yellow metal, Tanvir said, "Technically, gold prices could also go higher because all historical barriers have been broken."

Analysts were of the view that the ongoing confrontation with Iran is getting serious and this could be more intensified in the coming days and the next step may be imposition of sanctions.

"Oil prices have surged to a record high above $72 per barrel on the concern that Iran's nuclear stand-off with the West could cut oil exports from the world's fourth-largest crude exporter.

"This (confrontation) could lead to massive surge in oil prices, however, the magnitude of increase is difficult to predict, but in such a case oil could easily go above $100 per barrel," senior analysts said.

Replying to a question that the currencies could be weakened in near future, Tanvir said, "I don't see weakening of the dollar too much because of prospects of higher interest rates in the United States."

Domestic people, who had invested in gold earlier, seemed delighted when gold prices touched Rs12,000 per 10 gram on Tuesday.

Copyright Business Recorder, 2006