MUMBAI, May 23: Gold prices in India — the world’s largest consumer of the precious metal — were at a ten-year high on Thursday on sustained fears of a possible all-out war between India and Pakistan, dealers said.

The levels were still rising Thursday and gold was trading at Rs5,310.

The price of the yellow metal has surged today on the back of a firm opening on the London Metal Exchange. Globally there is a jump in gold prices, said Rashmikant Gandhi, gold dealer at Bombay Bullion Exchange.

Some cautiousness will set in later in the day leading to a moderate weakness at high levels. However the overall firmness will remain, he added.

The basic factor driving the price was the latest round of tensions between India and Pakistan as buyers wanted to put their money into something seen as “safe”, Gandhi added.

International prices have also been rising in recent weeks due to the Middle East tensions.

Stock dealers said investors were dumping shares and buying gold as war clouds loom large.

It always happens when stock markets crash, retail investors and high net worth individuals turn to gold, said a stock dealer with a domestic brokerage.

The Bombay Stock Exchange has fallen sharply in the past few days and is currently at a five-month low, dealers said.

Gold has been firm this year in India following a December attack on the parliament in New Delhi by militants, which triggered military and diplomatic tensions between the nuclear rivals.

Once again it is proved that gold is the only safe heaven for investments when it comes to a crisis, said G.S. Pillai, regional director of the World Gold Council.

It’s an established fact that gold is a strong investment option and one which does not depreciate in a crisis. Investors buy the metal as it can be sold whenever and wherever.

Gold has been seeing favourable days since September 11. Most of the key consumer nations, apart from India, had been buying the metal, Pillai said.

India is by far the world’s largest consumer of gold, with around 855 tons bought in 2001.

But recent figures showed that in the first quarter of this year, India saw a sharp fall of 40 per cent in gold purchases due to price volatility.

Pillai said other factors responsible for the fall in demand included a high level of stocks at the beginning of the quarter and the impact of the global slowdown, particularly in the IT sector, which affected sales of consumer goods.

On the other hand gold demand was up 38 per cent in Pakistan to 41 tons in the first quarter due to a boost in spending after an inflow of foreign aid when Pakistan joined the international coalition against terrorism following the September 11, attacks in the US.—AFP