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Gold glitters, trades at record high in Mumbai on peak wedding demand

Bullion traders say the actual trades are still around Rs 33,600 per 10 gram.

Rajesh Bhayani  |  Mumbai 

Gold glitters, trades at record high in Mumbai on peak wedding demand

price on Tuesday traded at an all-time high of Rs 33,310 per 10 gram in early trade in Mumbai. Such high levels were last seen in August 2013, when the Indian rupee fell against the US greenback, increasing the landed cost of

The reason for the high price of the yellow metal is being attributed to the peak wedding season demand. However, the base price of standard failed to close above the all-time high; it closed at Rs 33,215 per 10 gram.

Bullion traders say the actual trades are still around Rs 33,600 per 10 gram. But most buyers still prefer to exchange old jewellery for new. The Indian rupee approaching the level of Rs 72 a dollar has also resulted in imports getting costlier.

“At a time of higher and more volatile local gold prices, the market saw a rise in the number of consumers preferring to exchange existing gold for new pieces. This was particularly prevalent in the south and west regions, where some retailers reported an increase of up to 45 per cent in exchange activity,” said the World Gold Council in its December quarter gold demand trend report released last week.

The domestic market, till a week ago, reportedly saw discounts in the range of Rs 200 and Rs 250 per 10 gram. However, discounts have started to peter out with the onset of the wedding season and a lull in imports.

Prior to that, there was an inauspicious period and demand for the safe haven asset was virtually absent. In stark contrast, the market in New Delhi was quoting a huge premium; the price on Tuesday was Rs 34,000 per 10 gm, said a jeweller.

ALSO READ: Open interest in gold at 5-year high as traders expect prices to moderate

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Traders say that with the general elections round the corner, the selling of hoarded gold will accelerate. This will help meet the rising tide of new demand.

Sources say demand may, however, see some traction after March when farmers start getting proceeds of their rabi produce and election spending further increases cash available to consumers.

India’s bullion market lost some of its sheen in August 2013. With the Reserve Bank of India implementing the now-defunct 80:20 scheme, which allowed imports of gold by an importer only if he/she exported 20 per cent of the gold brought into the country in value-added form.

The scheme was introduced in July 2013 to rein in gold imports that zoomed to 165 tonnes, a monthly record, in May after global prices crashed. The United Progressive Alliance government came up with this restriction on curbing gold imports as the current account deficit rose alarmingly, leading to trade imbalance.

The market saw huge discounts at around Rs 1,300 per 10 gram on August 28, 2013, triggered by speculation that the government was taking measures to stem the slide in rupee. The rupee was at its nadir of Rs 68.8 against the dollar, which sharply recovered in less than a month, resulting in nosediving.

First Published: Tue, February 05 2019. 20:07 IST
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