 "Diwali sees lacklustre gold sales")
After a robust Dhanteras, gold sales were lacklustre on Diwali, with consumers staying away from purchases amid expectation of a further decline in prices. Many analysts forecast a steep fall in gold if there's an increase in policy rates in December by the Federal Reserve in the US, as it has hinted it will do.
Standard gold opened at Rs 26,050 per 10g at Zaveri Bazaar here on Wednesday but declined a bit to trade at Rs 26,010 per 10g in the absence of physical buyers. There was, therefore, a third consecutive annual decline in return on investment, down Rs 1,480 or 5.7 per cent from the Muhurat trading day the previous year, in this case from October 23, 2014.
“We recorded robust sales on Dhanteras because of its significance as an auspicious day. Thereafter, demand remained lacklustre as consumers waited for a further price fall on the US Fed’s interest rate hike expectation. A Fed rate hike in December is expected to raise investors’ confidence towards the US treasury, resulting in the dollar’s further strengthening. The dollar’s upward march would bring down other asset classes, including bullion,” said Kumar Jain, director, Umedmal Tilokichand Zaveri, a bullion dealer and jewellery retailer here.
The weak sentiment was reflected in the futures market, too, with the overall volume of trade lower this year. Total turnover on the Multi Commodity Exchange (MCX), the country's largest in the segment, was Rs 3,213 crore as of 7:30 pm, as compared to Rs 5,210 crore on Muhurat trading last year, on October 23.
Overall turnover in gold was Rs 696 crore, as against Rs 1,551 crore on the day last year. That in silver was Rs 325 crore versus Rs 840 crore last year.
Consumers’ investment interest on physical gold is also affected by the launch of the government-sponsored alternative, the scheme for sovereign gold bonds.” Mohit Kamboj, president of India Bullion and Jewellers’ Association (Ibja), says these would be priced at the daily closing one by the body.
Ibja is organising a third edition of the India International Bullion Summit, a one-day event, here on December 1.
Analysts estimate bearish gold prices in near futures. Ajay Kedia, managing director of Kedia Commodity Research, expects gold to test the range between Rs 22,500 and Rs 23,000 per 10g. “With Fed officials already taking up the possibility of a December rate hike, as well as focusing their attention on jobs and growth at home, there is clear pressure on gold and silver (prices),” he said.
Gnanasekhar Thiagarajan, director of Commtrendz, a city-based brokerage, believes gold will slip to $1,045 an oz in London, translating to Rs 22,500 per 10g in India. There is expectation of an import duty cut from the existing 10 per cent to two per cent.
