After over four months of lull business season, gold demand in the physical market has revived with the long awaited correction in price in Mumbai’s Zaveri Bazaar. Jewellery retailers have been witnessing a consistent 15-20% accumulative growth in sales over the last two days due to correction in spot prices.
Gold price has declined by around 2% in the last two days in Indian markets despite a spurt in global prices. In Zaveri Bazaar, physical gold was quoted at Rs 32,000 per 10 grams in early Saturday trade, a decline of around Rs 250 from the previous day and Rs 750 two days ago. Bombay Bullion Association (BBA) quoted gold’s average price on Friday at Rs 31720 per 10 grams, a decline of Rs 240 from the previous day.
“Precious metals are tracking the movement in the Indian rupee which appreciated over 2 per cent in the last two days. Consequently, gold price plunged in local market despite a dramatic rise globally,” said Lalit Jagawat, proprietor of Nakoda Bullion, a bullion dealer in Zaveri Bazaar.
Indian rupee closed on Friday at 53.47 as against the level of 54.39 on Thursday.
Meanwhile, in futures market the falling trend continued on Saturday. Gold for near month delivery slumped by 0.16% to Rs 31496 per 10 grams on the Multi Commodity Exchange (MCX). The metal for delivery in December, February and April also fell by 0.19%, 0.15% and 1.13% to Rs 31786, Rs 32160 and Rs 32585 per 10 grams respectively on the exchange.
Spot gold in London was up 0.6% at $1,777.19 an ounce on Friday after hitting a high of $1,787.20, within reach of the 2012 high of $1,790.30.
U.S. COMEX gold futures for December delivery gained $9.70 to $1,779.90 an ounce, with trading volume on track to finish above its 250-day average. COMEX futures' open interest, which measures the total outstanding long and short contracts, rose to a one-year high at 483,107 lots as of Thursday. Open interest of U.S. gold futures has gained about 25 percent in the past 30 days.
The yellow metal hit record highs in euro terms on Friday as new monetary easing measures from key central banks, including the U.S. Federal Reserve, fuelled investment in the metal. Euro-priced gold hit a high of 1,374.10 euros an ounce and was up 0.9 percent at 1,373.61 euros an ounce. Spot gold was up 1 percent at $1,784.61 an ounce, having earlier hit a 6-1/2 month high.
Consumers’ appetite for gold has again come back with more footfalls are currently being seen in jewellery shops. This is the beginning of the festival season which will continue until Diwali. Hence, the physical gold demand which has risen by 15-20 per
cent in the last two days is likely to continue irrespective of price movement, said a precious metal analyst.
The festival season constitutes around 40% of India’s annual gold demand which the World Gold Council (WGC) forecasts to decline 20% in the second half of the current calendar year on account of rising recovery from domestic sources through scrap
recycling. The Council forecast total gold import at 305 tonnes in the second half of the current calendar year as compared to 380 tonnes in the corresponding period of the previous year. The estimated decline in the second quarter of gold imports, however, is
10% of total imports India witnessed in the first quarter at 340 tonnes.