Scaling towards a new high, gold continued its upward march for the seventh consecutive day on Monday in Mumbai’s Zaveri Bazaar.
Boosted by robust festive demand from consumers who have reconciled from the fact that prices will remain high, and bullish guidance from global markets also aided local prices to go up. Silver followed suit with consumers opting for a cost-effective precious metal without compromising their affection for the bullion.
Standard gold jumped 0.79% or Rs 250 to close the day at Rs 31,900 per 10 grams. Gold price had set the highest record in September to close at Rs 32,200 per 10 grams. Similarly, silver closed with a gain of 0.98% or Rs 605 to Rs 62365 a kg.
The price rise, however, hardly made any impact on consumers’ enthusiasm on Dhanterus, the most auspicious day of the season for buying the precious metal.
Traders estimate 2.5 tones of gold sales by bullion dealers and jewellery retailers on Sunday, around 30% increase from the same day last year.
Despite higher prices consumers’ enthusiasm remained robust in anticipation of further price spurt going forward.
“Gold has given just 7-8 per cent returns in the last one year against a sustained 35 per cent compounded profit in the last five years. The yellow metal remained resilient to certain extent this year due to ongoing economic concerns in the US and Europe.
The precious metal, therefore, holds potential to respond as usual positively to dwindling global economy when investors book gold as safe haven,” said Ashok Minawala, ex-chairman of apex trade body All India Gems & Jewellery Trade Federation (GJF).
Minawala forecast gold price to hit Rs 33,000 per 10 grams before the end of this year.
Gold edged higher in Europe on Monday morning on continued safe haven buying prompted by worries that the US could return into recession if economists fail to decrease the deficit. Spot gold in London was quoted at $1736.65 an oz, higher by $6.5 an oz from Friday’s close. The metal, however, traded in a thin range of around $5 Monday morning. Silver, meanwhile was trading with a marginal decline of 10 cents at $32.70 an oz.
The depreciation in rupee against the dollar was the biggest supporter of gold’s price rise in India. The Indian currency depreciated to close the day at 54.88, a decline of 0.13 against the US dollar. The Indian currency has fallen over five per cent in the last few weeks.
Similarly, the euro was battling against a stronger US dollar after it hit intra-day low of 1.2695. The euro was trading at 1.2705 against the dollar in early Monday trade.
This festive season, however, a remarkable change was witnessed in bullion purchase. Against the move in the last few previous seasons when consumers were buying more of coins and bars, ornaments were in high demand during this season.
“Consumers are skewed towards jewellery this season unlike the past few years when investment products including coins and bars were preferred. Mandatory hallmarking has changed consumers’ sentiment especially for ornaments’ resale value. Hence, despite higher prices, jewellery consumers are opting for ornaments over coins and bars,” Rajesh Mehta, Managing Director, Rajesh Exports, a leading gold jewellery manufacturer and retailer.
Gold price has surged five% since last week restraining thereby, consumers for heavy weight purchase.
According to Rajiv Popley, director of Popley Group, another leading jewellery producer, the sale of jewellery is more towards light weight designer jewellery this year as consumers are looking for an ornament due to rising gold prices.