A sudden rush of gold scrap sales by dealers wishing to take advantage of a record surge in the metal’s prices widened availability and pulled down prices on Thursday, after a record high of Rs 20,000 per 10g in late evening trade yesterday.
On Thursday, despite its rocketing to an all-time high in the London market, the price at the Zaveri Bazar market closed at Rs 19,880 per 10 gm as against Rs 19,695 per 10 gm yesterday. It went to a record high abroad, as buying gained momentum due to the dollar’s depreciation against major currencies; it is at its lowest level in 10 months. Spot gold hit $1,385.55 an oz on Thursday against yesterday’s last quote of $1,370.90 an ounce in New York. Silver also rallied to fresh highs to hit $24.90 an oz, its loftiest in 30 years, as against the metal’s last trade at $23.89 an oz in New York yesterday.
As for India, “the prevailing discount is purely based on high availability from local sources. Scrap gold sales surged 30-40 per cent on Thursday,” said Ketan Shroff, director of Pushpak Bullions, a local retailer.
Sale of new gold has halved, as only need-based buyers are booking afresh. Global prices have risen by nearly $100 an oz in the past 10 days and investment is by those who anticipate further rise, he said. Traders say gold’s fresh booking has plunged.
“Retail consumers are totally absent from the market on Thursday, in anticipation of a correction in prices, which they feel is imminent. Sales are purely based on speculation, after it soared to an all-time high in global markets,” said Jitendra Jain, partner at Jugraj Kantilal & Co, another local retailer.
Gold contracts for delivery in December were trading on the Multi Commodity Exchange (MCX) at Rs 19,929 per 10g in early evening trade, after hitting a lifetime high of Rs 20,028 per 10g earlier. Contracts for delivery in February 2011, April 2011 and June 2011 are trading high at Rs 20,090, 20,242 and 20,325, respectively.
“Retail gold sellers are queueing for selling their gold holding, as metal prices have hit their expected levels,” said Suresh Hundia, President, Bombay Bullion Association. Demand is likely to resume in the wake of the ongoing festival and wedding season. But high scrap recovery is expected to slow imports this year.