Gold jumped a staggering 2.98 per cent on Thursday as investors seeking exit from other investment avenues took shelter in bullion.
Standard gold in Mumbai’s Zaveri Bazar shot up by Rs 455 to rise to a seven-month high of Rs 15,700 per 10 gm while pure gold surged to Rs 15,320 per 10 gm. In London, gold prices perked up to $987 in early Thursday trade, taking cue from New York where spot gold rallied to $980.10 an ounce, its highest since early June, before finally settling at $977.15 an ounce on Wednesday.
The yen touched seven-week high against the dollar on Thursday as investors pruned dollar holdings after a worse-than-expected US private-sector jobs report which renewed concerns about recovery in the world’s largest economy.
Markets remained almost closed due to Ganapati immersion, the last day of the 10-day popular Ganapati festival in western India. Above all, buyers remained totally absent from fresh bookings.
“Who will buy at this price ?” asked Ketan Shroff of Pushpak Bullions, a Mumbai-based jewellery retailer and member of the Bombay Bullion Association (BBA).
Meanwhile, analysts are divided at gold’s outlook at least for the next fortnight as consumers will have reasons to abstain from fresh bookings. The inauspicious “Shraddha Paksha” is beginning from Friday which will continue for 15 days. Hindus preferably prevent owning new things including gold items during this period.
“Since, fresh booking will be lacklustre in India, the world’s largest consumer, the price of yellow metal may decline,” said an analyst with a leading research firm.
While others believe that gold’s prices would continue to rally in India because of a combination of factors. Overseas also, prices are firming up as a fair amount of investors from copper and crude oil are pulling out to invest in gold. Since other asset classes, including equities and real estate, also share uncertain future, investment in gold could provide assured returns, Shroff said.
The price rise is significant as gold was earlier considered as the most preferred saving option in the average middle class household, is now gradually becoming unaffordable. Consumers’ preference is changing with bank deposits and insurances gaining momentum as compared to gold, said the analyst.
Meanwhile, Indian Bullion Market Association (IBMA) estimated India’s gold imports to decline over 60 per cent in 2009 at 250 tonnes as compared to 675 tonnes in the previous year.
According to Suresh Hundia, director of BBA, gold import declined over 90 per cent to 8-9 tonnes in August because of high prices. If the price continues to rise at this level, the next festival season between August-December will be severely hit, said Hundia.
