Gold prices today crossed Rs 15,000 per 10 gm, a level that the trade considers a psycholgical barrier for middle-class consumers, who comprise over 60 per cent of buyers in volume terms.
The yellow metal with highest purity closed at Rs 15,010 per 10 gm, a level it had previously seen on June 1 (at Rs 15,035 per 10 gm). The metal gained 1 per cent from the previous close of Rs 14,890 per 10 gm.
Standard gold followed and gained around 1 per cent to close the day at Rs 14,940 per 10 gm. Considering 1 per cent value-added tax, standard gold also hit the said level, giving sufficient reasons for consumers to abstain from fresh buying. Even need-based fresh orders were absent, said traders in Zaveri Bazar, the precious metals trading zone in Mumbai.
Gold prices have been above Rs 14,000 per 10 gm for almost four months, which according to the World Gold Council (WGC) was not having any impact on buying in India. WGC, through a statement today, said the high value of the rupee was not having a significant impact on demand from trade in the run-up to the coming wedding and festival seasons.
Although higher prices are leading to some hesitancy by consumers in the short-term, there are indications that trade buyers expect the price to continue to move up and therefore remain committed to building stock, according to the council.
The prevailing economic weakness and subsequent depreciation of the rupee against the dollar provides the context for the rupee’s spike today. A strengthening dollar and a falling rupee saw the gold price in India reach over Rs 15,000 per 10 gm and caused some speculation as to the impact on buying ahead of the forthcoming buying season, according to the report. “The continuing fluctuations in foreign exchange markets have caused a short-term rupee price spike for gold. However, this must be viewed in the context of a longer-term gold price trend, which has displayed a growth trajectory for more than 24 months,” WGC’s Managing Director for the Indian subcontinent, Ajay Mitra, said.
In London, the precious metal perked up to $953.3 an ounce, a rise of $15.6 from Friday’s close.
