Standard gold fell 3.19 per cent on Tuesday in the spot precious metals market in Mumbai on sustained selling pressure from a recovering rupee. This has seen the metal lose its sheen and appeal as a safe haven during times of economic crises.
Standard and pure gold fell Rs 425 each to close the day at Rs 12,900 and Rs 12,960 per 10 gm respectively as retail buyers stayed away from fresh orders.
“Retail buyers will stay away till January 14-15 when the inauspicious day for owning yellow metal ends. By then, the domestic demand would continue to remain under pressure,” said Bhargav Vaidya of B N Vaidya & Associates. When price starts declining, buyers estimate the metal’s new lows for fresh investment. Sometimes, it becomes beneficial also, Vaidya added.
It is logical this time as well, as analysts forecast the yellow metal to decline to Rs 12,700 per 10 gm in rupee terms while the same is expected to fall below $800 an oz in London. Ketan Shroff of Pushpak Bullion Pvt Ltd, a trader in Mumbai’s famous Zaveri Bazar, anticipates the price to nosedive to Rs 12,500 per 10 gm as early as next week on a falling investment demand.
Business for bullion traders in India runs dry during the one month inauspicious period-ending January 14 but recovers, generally, soon after that on a stockist demand ahead of the wedding season. But, this year, gold is lacking strength because of price volatility.
Apparently, the sentiment in other asset classes including crude, real estate, currency and others are dampening demand, pulling gold prices down.
Gold, which moves inversely with the US dollar, is finding no support from crude as the price of mineral oil has declined enormously, over 10 per cent in the last two days. Presently, crude is trading around $37 per barrel while the US dollar is trading at 49.03 against Indian rupee. The rupee recovered from an early slide as investors hoped for foreign fund inflows despite grim looking stock market scenario post Satyam scam. Analysts said that dollar’s strength against the euro, yen, pound and other currencies could prevent sharp gains.
Overseas selling pressure replicated on the Multi-Commodity Exchange (MCX) on Tuesday where gold futures declined about 1 per cent.
The contract for delivery in February declined 0.57 per cent to Rs 12,920 per 10 gm early evening. Contracts for delivery in April and June also followed suit to trade at Rs 12,951 per 10 gm and Rs 12,978 per 10 gram with a decline of 0.64 per cent and 0.68 per cent respectively
Gold guinea for contract expiry on January 31 slumped 0.79 per cent at Rs 10169 per 8 gm while the March contract fell by 1.01 per cent to Rs 10,222 per 8 gm.
