Seasonal Demand Dip Dims Gold

A dip in seasonal demand took some shine off gold prices in the country and Dubai, while prices remained mixed in Pakistan due to low offtake in the Moslem festival month of Muharram, dealers said on Monday.

They said the wedding season in the country, the world's single biggest gold market, was starting to wind down.

This, coupled with the Moslem Muharram period, was beginning to put downward pressure on business, dealers said. On the Bombay bullion market, seasonal buying turned slow at higher levels while sharp losses in the world market prompted profit-taking during the week.

24-carat gold moved down by Rs 45 to Rs 4,795 per 10 grams in the week to Monday. Prices of gold biscuits (116.50 grams) slid by Rs 500 to Rs 56,100 per piece during the same period.

 

Fresh arrivals of imported gold remained low during the week and local supplies too remained low amid the absence of any offerings (of confiscated gold) by the customs department, said Bhayabhai Sanghvi, a leading dealer in Mumabi.

Though supplies were low, gold prices in the Mumbai market fell back sharply on reports of sharp losses in the world market, which brought down the landing cost of the imported yellow metal and triggered panic selling among the stockists, he said.

World prices moved down to $343.50/344 per ounce during the week from $349/349.50.

Babubhai Jain, a leading jeweller, said local gold prices might bounce back on fresh seasonal buying and higher rural demand from farmers as sales of summer crop were picking up.

In Dubai, the trading hub of the United Arab Emirates, traders reported the first signs of a seasonal easing in bullion demand from the subcontinent amid subdued retail jewellery interest.

India and Pakistan are pretty dull because it is the Muharram season and there is not too much buying, said one trader.

One trader said any good early rains in the country might fan gold demand. Any early indication of a good monsoon might be a fillip for the market, he said. The annual monsoon rains in the country begin in June and last until September. On the local retail market, business was slow in the wake of a month-long government-sponsored promotion which closed at the end of April.

Another trader expected local retail sales to pick up ahead of the summer holidays, when many expatriates buy gold to give as presents to families back home.

In line with the fall in world gold prices, the price of Dubai's benchmark 10 tola bar dropped to 4,763 dirhams ($1,298) from 4,810 dirhams a week earlier. The bar is equal to 3.746 ounces of 24-carat gold.

In Pakistan's main commercial city of Karachi, dealers said they expect prices to9 remain mixed.