The Samvat 2069 began with a marginal decline in gold prices in Mumbai’s Zaveri Bazaar due to the lack of business activities on the occasion of Diwali, the first day of the Hindu calendar, as bullion dealers ended the day with the pooja and celebration post recording of prices of precious metals in their annual handbooks.
Standard gold lost Rs 100 to trade at Rs 31,800 per 10 grams on Tuesday compared to Rs 31,900 per 10 grams on Monday.
In contrast, however, silver remained a preferred substitute among retail buyers resulting into the white precious metals traded with Rs 800-900 premium over imported cost. The metal also gained Rs 400 from the previous days’ late evening closing price to settle on Tuesday at Rs 62300 per kg.
“Silver has outperformed gold in the last two months with over 20 per cent returns. The metal fell to the level of Rs 53,500 a kg and recovered later to Rs 64,000 a kg. Against that, gold has offered just 5-6 per cent returns in the same period. This raised hope for investors to grab a share in the commodity which has immense potential for price rise,” said Rahul Mehta, managing director of Silver Emporium, one of the largest silver dealers in Mumbai.
Apparently, silver in India has given 12.84 per cent returns in the Samvat 2068 to end the year at Rs 62365 a kg from the level of Rs 55270 a kg the same day previous year. Similarly, gold has offered 12.05 per cent returns during the Samvat 2068 compared to close at Rs 31900 per 10 grams from the level of Rs 28470 per 10 grams a year ago.
Interestingly, the returns in both precious metals can largely be attributed to the equal depreciation in the Indian rupee against the dollar. The rupee depreciated by 10.84 per cent to close the year on Monday at 54.88 against the greenback.
In dollar term, however gold has given a negligible 0.53 per cent returns to settle at $1733.93 on Monday. Silver, however, offered a negative returns of 2.71 per cent to settle the year at $32.51 an oz during the Samvat 2068.
“Had the rupee not depreciated, investor would not have got any returns this year,” said Prithviraj Kothari, president of the apex bullion trade body the Bombay Bullion Association (BBA) and the managing director of Riddi Siddhi Bullion Ltd, a leading Mumbai-based bullion dealer.
The returns in gold and silver for Indian investors remained the lowest in four years. The major hindrance for a positive sentiment in precious metals, according to Ketan Shroff, director with Pushpak Bullion, was the import duty which in January was doubled to 2 per cent and raised later in March to 4 per cent.
Kothari, however, forecast bullion’s demand to depend upon their price behaviour going forward.
“The scheduled wedding season beginning next month would determine the fate of bullion dealers for future. But, high price continued to prove a deterrent for buyers,” he said.
Meanwhile, gold for delivery in December 2012 gained 0.11 per cent to Rs 31812 per 10 grams in the Muhurrat trading on the Multi Commodity Exchange (MCX). Far months contract i.e. for delivery in June 2013, in contrast, declined a marginal 0.06 per cent to trade at Rs 32910 per 10 grams at 6.20 PM on Tuesday.