Pre-Festival Demand For Gold Picks Up

Dealers in Mumbai said demand for gold had gone up 30-40 per cent in the week to Monday as purchases for Diwali, improved. This year, Diwali is being celebrated on November 10 and 11.

But prices are down because of a weak trend in world markets, said dealer Babubhai Jain. The price of standard gold (24 carats) on the Bombay bullion market fell Rs 30 to Rs 5,140 per 10 grams in the week to Monday.

Jewellers said the auspicious buying of gold as part of worship to the goddess of wealth would begin two or three days before Diwali when prices would also rise.

 

Traders in Hong Kong said gold prices yesterday opened slightly lower at $377-378.30 per ounce, against the Saturday local close of $378.50. Dealers expect gold imports into India to rise because of depressed world prices.

Indian importers have booked gold consignments at $377/378 per ounce but these will only arrive after Diwali, said Jain. I expect prices to fall after Diwali and recover in December when the wedding season begins, he said.

Dealers said demand for gold in villages, which coincided with the just completed harvest of crops, had yet to pick up. Farmers traditionally put money in gold as an investment and hedge against inflation. Unseasonal rains and cyclonic storms in October had damaged standing crops in some regions. This can subdue demand for gold to some extent, said a dealer.

Traders in Dubai, which feeds gold demand in India and Pakistan, said demand for the metal started firming ahead of Diwali. There is good demand in India for gold and silver, particularly to Delhi, because of the festival season, one trader at a Dubai jeweller said.

In Karachi, gold prices are likely to rise slightly in the next few days on increased demand after holding steady last week, dealers said. They said gold had stood steady as the dollar was in demand after a 7.86 per cent devaluation on October 22. More players are now switching to gold, one dealer said, predicting that the dollar would slip in the kerb market on profit-taking.