Demand weak in India as Gold Price "keeps customers away"...
ANOTHER MILESTONE has been crossed by the Gold Price in India, writes MineWeb's Shivom Seth in Mumbai.
Continuing its record-breaking rally, the price for Gold Futures hit another high of $580.24 per 10 grams on Tuesday, with speculators creating fresh positions. Investors, though, remained wary and shied away from making fresh purchases. Traders said investor interest in India is the key to further price direction and that not many would be interested in gold purchases at this high Gold Price.
Gold has been testing new highs over the last couple of days on concerns of high inflation and a sharp fall in the stock market here. Analysts maintain the fall in equity markets across the world has also seen a substantial fund flow into precious metals including silver, leading to substantial appreciation in prices. A situation that is leading to much concern in India.
At the Multi Commodity Exchange, gold for delivery in October climbed $21.17 to trade at an all-time high, with a business turnover of 29,258 lots. It had closed 2.4% higher at $559.07 per 10 grams in the previous session on Monday.
Traders said gold for delivery in February also traded at a record high, up by $17.69 per 10 grams, with a business turnover of 43 lots. Similarly, gold for delivery in December rose by $19.26 per 10 grams, with an open interest of 615 lots.
On Monday, the Gold Price had crossed the crucial $553.59 per 10 grams spot, as stock markets across the world tumbled after Standard & Poor downgraded United States' credit rating from the coveted AAA to AA+.
Traders insist that since Gold Prices have hit historic highs, it has dented the allure of the yellow metal for many investors. "The World Gold Council has noted that India's demand rose 12% in the first quarter of the year. This is bound to take a hit now. Such a high price is keeping many customers away,'' said Sashank Joshi, bullion retailer.
Added Bhadresh Shah, bullion analyst with a brokerage firm here, "The spike in prices has made customers a little cagey. Many prefer to sit this one out.''
Joshi added that gold demand would continue to remain weak. "No one will Buy Gold at this price. It has got to come down for customers to come back into the stores again,'' he said.
Traders were of the opinion that the high Gold Price would kill consumer interest.
"Gold Prices have been climbing for the second straight day, lurching higher overnight. We have had no customers for the entire day, except for some meager enquiries. If this continues, we could be in for troubled times ahead with the festival season around the corner,'' said gold jewelry retailer, Toranimal Shah.
"Many customers have curtailed buying jewelry and impulsive purchases too have disappeared,'' said Kirit Shah, a Mumbai-based jeweler. Many traders and retailers expect the run-away Gold Price to take a breather with profit-taking. "Only then will consumers commence buying,'' Shah added.
Get the safest gold at the lowest prices with BullionVault...