Gold: Indian consumers needn't worry

MARKET OUTLOOK

Barring a few hiccups, gold's upward movement is likely to continue in the global market. Experts believe the yellow metal will hit the new historical benchmark of $971 an ounce by the early next year. In the short-term, it may try to touch the all-time high of $850 in a fortnight or two.

But domestic consumers need not worry as continuous rupee appreciation may keep the price within affordable limit of Rs 12500 per 10 gram or even lower, thus having minimal impact on their outgo. However, if the price continues to go up further, doemstic demand would surely be hit, said a leading gold trader.

Ajay Mitra, MD of World Gold Council-Asia Pacific, had earlier said that a price rise of Rs 100-200 would not affect India's gold consumption pattern. But, if the price suddenly jumped by Rs 1,000-2,000, spots may be left deserted, he added.

Though India is a leading consumer of gold, prices in the domestic market are determined by global factors including the movement in crude. However, the appreciation of rupee alone can neutralise the external factors driving gold prices. Meanwhile, gold price in London jumped sharply by 2.23 per cent, or $17.35, to close at $796.5 an ounce last week. Robust buying continued in New York in anticipation that minimal impact of high global prices in India would lure consumers to book the yellow metal heavily during the ongoing festival and wedding seasons there.

In Mumbai, gold closed with a mere weekly gain of 0.16 per cent, or Rs 160, to settle at Rs 10100 per 10 gram (standard) and Rs 10150 per 10 gram (pure).

According to analysts, the dollar's depreciation against all major currencies is pushing the prices up and will continue to do so. Dollar depreciated roughly by 15 per cent (at 39.32 today) in the last one year taking gold prices up by 23 per cent. On MCX, however, December futures recorded a weekly jump of 1.07 per cent to Rs 10085 per 10 gram as against Rs 9978 per 10 gram.