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Gold hits two-month high, demand falls 3% due to GST

Spot gold price rose 1.3 per cent on Thursday, the biggest daily gain since mid-May

Dilip Kumar Jha  |  Mumbai 

Gold, gold imports

price hit a two-month high on a weak dollar, as investors' renewed safe-haven buying interest erupted out of geopolitical between and the

Standard in the popular Zaveri Bazaar in Mumbai jumped by 0.5 per cent or Rs 140 to close at Rs 29,210 per 10 grams on Friday gaining 2.5 per cent during the week. Rising prices have driven buyers out of the physical who preferred to "wait and watch" before placing new orders.

prices in India followed broadly global with its price was up by 0.7 per cent at $1,286.07 an oz in London, the metal's highest level since June 8 as investors sought safe haven refuge in the yellow metal amid "war of words" and "threat of attack" between and the  

Physical demand for has been lower due to the levy of 3 per cent GST in addition to 10 per cent of import duty. has become costlier with the implementation of GST being the overall levy higher by 0.75 per cent under the GST regime.

"Physical demand has declined tremendously since the implementation of the GST effective July 1. With the festive season coming in, physical demand is expected to rebound in near term," said Ketan Shroff, Director, India Bullion and Jewellers Association (IBJA), the premier industry body of India's leading bullion dealers and jewellers.

Spot price rose 1.3 per cent on Thursday, the biggest daily gain since mid-May. For delivery in December, the US futures climbed by 1 per cent to $1,291.80 an oz.

"Geopolitical between the US and remains high which will drive prices upwards. But, investors should trade in with caution," said Prathamesh Mallya, Chief Analyst (Non-Agro Commodities & Currency), Angel Commodities Broking.

Meanwhile, prices traded higher by 0.4 per cent today at $1,287 an oz on Friday translating 0.2 per cent increase in on the Multi Commodity Exchange (MCX) here with the contract for delivery in near month jumped to Rs 29,230 per 10 grams. US and continue to be the centre stage for safe haven play in prices while global equities continue to fall for the four consecutive sessions creating the safety net for precious metals pack, said Mallya.

Investors' risk appetite has changed from equities to precious metal which was evident from the fifth consecutive day's decline of the benchmark Sensex and Nifty in India on Friday.

Fearing a pullback, the depreciated by nearly 1 per cent over the week to close on Friday at Rs 64.14 against the WTI prices are trading lower by 0.5 per cent at $48.34 a barrel while prices are trading lower by 0.64 per cent at Rs 3,108 per barrel. prices are falling today after the International Energy Agency said market balancing will take time despite strong demand growth for also followed the move and rose in tandem with

While announcing the Demand Trend (GDT) early this month, the World Council (WGC) estimated India's demand to remain range bound with an upward bias. Even with the low range of 650-750 tonnes, India's demand has to be over 350 tonnes in the second half from 298.4 tonnes in the first half of 2017 calendar year, Somasundaram PR, Managing Director of WGC had said earlier.

First Published: Fri, August 11 2017. 21:23 IST