Gold fails domestic investors

Investment in yellow metal has given paltry returns of 6% over a year.

Ravindra Chauhan, a regular commodity investor, is now regretting his decision to invest in gold, which fetched him only 6.08 per cent in the last one year because of a stronger rupee. He says that most banks' fixed deposits would have made him richer by at least 9 per cent during the same period with little holding risk.

Standard gold in the last one year jumped by Rs 540 to Rs 9,420 per 10 gram. The price would have gone up much sharper if the rupee had been at the last year's level.

In London, however, gold jumped to $730 from $593 in the last one year. Had the rupee been at 45.90, the level it was a year ago, the gold price would have surged by Rs 6,288.30 an ounce or by Rs 2,218 per 10 gram.

The rupee is currently quoting at 39.58 against a dollar, a depressing level for investors such as Ravindra Chauhan.

Today, investors are not interested in opting for gold as the returns are minimal. With the rupee expected to touch 38.50 against a dollar, traders expect the domestic prices to remain below the global prices by 3 per cent.

Prithviraj Kothari, director, Riddhi Siddhi Bullion, argued that gold was witnessing a need-based purchase as against investment-based buying earlier.

"Today, interest rates in bank deposits are much higher and more importantly, they involve no risk against higher risks involved in holding gold physically.

Agencies such as World Gold Council (WGC) is continuously making its efforts to attract consumers towards gold despite skyrocketing prices. WGC, a premier organisation for gold promotion, in association with its key partner, is planning to organise a series of gold jewellery shopping festivals in India.

The first of its kind is likely to take place in Bangalore in the next 15 days. With an interval of a fortnight or a month, the WGC is planning to organise such festivals in Mumbai and Delhi followed by other cities including Chennai.

Without divulging names of the key partners, Ajay Mitra, MD (Indian sub-continent), WGC, said that the gold body was in the process of holding such shows throughout the country primarily in the South, where demand had seen a decline because of high prices and profit-booking globally.

"The demand has moderately declined in the South but no such percolation has been reported in the North and the East," said Mitra.

Ashok Minawala, Chairman of All India Gems & Jewellery Trade Federation, although admitted a nationwide decline in gold sales, he said that a rebound was possible after October 12, the end of shraddh paksha.

Meanwhile, standard and pure gold in the spot Mumbai bullion market declined by Rs 120 to Rs 9320 (.995) per 10 gram and Rs 9370 (.999) per 10 gram respectively. Traders attributed decline to the lack of domestic demand.