Gold hits record high as dollar sets new lows

Gold makes a record of USD 1,195 per ounce in the day. It is trading at 16% on the higher side for this month. This is a biggest monthly gain in the last one decade. CNBC-TV18's Commodities Editor Manisha Gupta reports.

Below is a verbatim transcript of her comments on CNBC-TV18. Also watch the accompanying video.

The weak dollar has given some legs to some commodities. The Dollar Index continues to be on the shorter side, trading at fresh 15 month low. In the Dollar Index, we have seen 74.17 as the 15 month low. The Asian markets have improved a bit. However, the dollar continues to trade quite weak at 14 year lows versus the Japanese yen below 87. It is also trading at around 1.5 year low versus the Swiss Franc and a 15 month low versus the euro as well. This definitely has given legs to commodities, especially to the gold prices which are trading at record highs. We have done USD 1,195 per ounce in the day. It is trading at 16% on the higher side for this month. This is a biggest monthly gain in the last one decade.

Lots of support has come in from the central bank buying where India could be again looking at buying from International Monetary Fund (IMF). There are no confirming reports but there are no denying reports on that as well. Apart from India, it has been Vietnam, Russia, Mexico, Mauritius and Sri Lanka which have been buying gold from IMF and otherwise.

Support has also come in from reports of gold shortage. The US mint has taken out a report saying that they have suspended gold coins minting because they have already sold 88% more gold coins from what they have sold last year.

At this point in time, they do not have enough gold for that. Similar reports have come in from Canada as well. London futures for gold are being settled by further future contracts. They do not have bullion for delivery there. Therefore, these kinds of reports also have taken prices on the higher side. Nobody is calling it a bubble as yet, in case of gold prices, till the cost of money rises sharply, you see dollar prices actually strengthening and till the budget deficits are actually reduced. Until then, markets do feel that the gold momentum could carry on. The next levels to be watched out for are USD 1,220-1,240 per ounce.