Bullion dealers are hopeful for a revival in demand after three days of weak sales due to an occasional decline in the prices of both gold and silver.
“The trend seen over the years is that gold prices rise during Diwali and silver manages to edge up post the festive of light. But, the bullion price in India retreated over 5 per cent from the high reached on September 14. Consequently, gold demand is expected to rise in the upcoming festival season which would continue until December due to weaker prices and stronger jewelry and investment purchases,” said Prithviraj Kothari, Managing Director, of RiddiSiddhi Bullion and president of the Bombay Bullion Association (BBA).
Following the global move the previous day, gold price plunged in Mumbai’s Zaveri Bazaar by Rs 700 or 2.25 per cent on Saturday to trade at Rs 30400 per 10 grams early afternoon. Similarly, silver nosedived by 2.49 per cent or Rs 1500 to sell at Rs 58800 a kg.
In London spot market, gold price tumbled to $1677.5 an oz from $1717.2 an oz on Friday. Similarly, silver fell from $32.37 an oz to $31 an ounce. The previous metals’ in London was largely attributed to weakening global economic sentiment resulting into higher inflation. The prevailing uncertainty related to the so called ‘fiscal cliff’, automatic spending cuts and tax rises in India has threaten to send the country back into recession if the ruling political party Congress fails to reach a deficit reduction deal by end of 2012, said Kothari.
In India – the world's largest gold consumer – the ensuing Diwali festival will mark the peak of annual demand consisting of around 35 per cent of annual sales.
“The price decline is a Diwali offer for purchaser which generally does not happen during festival season. This, however, is set to raise demand of bullion which remained lackluster in the last few days and months,” said Lalit Jagawat, proprietor of Nakoda Bullion.