Local gold prices dip 15% metal drops 15% prices

Stockists mop up the yellow metal on rupee appreciation.

A surging rupee has led to a fall in prices of gold by around 15 per cent in the domestic bullion market in the last four months. The imports of the yellow metal, whose demand is on the rise in the South Asian markets, have been fuelled on the back of an appreciating rupee.

"Gold prices have fallen by around 15 per cent in the last four months and they have helped buyers and stockists to increase their imports of the yellow metal," said Biren Vakil, a commodity analyst.

"In February, gold prices (9.95 per cent purity) were around Rs 10,000 per 10 grams, while the domestic currency was Rs 45 to a dollar. The rupee has become stronger against the dollar and now quotes at Rs 40.50 a dollar even as the prices of gold have come down to around Rs 8,600 per 10 grams, " noted Vakil.

"The rupee appreciation in the last four months has helped stockists. The demand during the period was at an all-time high because of the marriage season and the falling prices helped buyers to stock up the yellow metal," said an Ahmedabad-based bullion trader.

The bullion market that remained dynamic in the past four months was about to snap the bullish sentiment, with the gold demand dropping following the end of the marriage season. The markets were likely to become sluggish, he added.

However, the World Gold Council says that the demand for gold is here to stay on the back of a constan increase in demand from the South Asian markets and low production.

According to the council, global gold mine production contracted by 3 per cent (2471 tonnes) last year, reversing nearly all of the previous year's small rise.

Production in 12 of the top-20, gold-producing countries declined, with the biggest fall recorded in Indonesia "� which was affected by a pit failure in Batu Hijau "� Canada and Papua New Guinea.

Latin America was at the other extreme, with especially strong production increases in Argentina, Mexico, Venezuela and Brazil, the council added.