Gold back in demand as rupee turns stronger

Kolkata: There has been an uptick in demand for physical gold since last week as prices fell 3.76 per cent in one month following the strengthening of the rupee against the dollar. After a muted Diwali, gold trade is seeing a recovery, led by South India, that accounts for 40 per cent of India’s annual gold consumption of 800-850 tonnes.

“In the last 3-4 days, we are seeing that buying has started picking up bringing some movement in the market. Drop in price due to rupee appreciation is the major reason for this renewed interest in the yellow metal,” Surendra Mehta, national secretary, India Bullion Jewellers Association, said.

Price of the yellow metal had touched a high of Rs 32,020 per 10 gm (without GST) on October 25 and has slipped to around Rs 30,815 per 10 gm (without GST) on Tuesday at Zaveri Bazaar, Mumbai’s gold hub.

gold graph

Despite the uptick in demand, gold is not attracting any premium at the B2B level as there is enough supply in the market. Ketan Shroff, managing director, Penta Gold Bullion said “Gold is available at a discount of $2-$3 per troy ounce. There is gold from the refinery as well as scrap gold in the market, which is why the precious metal is available at a discount.” Gold demand in India usually spikes towards the end of the year, when gold buying for weddings and major festivals such as Diwali and Dussehra is considered auspicious. The festive season demand this year has been muted due to liquidity crunch, rising local prices and the impending elections in some key states.

However, over the last few days, South India is showing a recovery in demand. “Demand in Tamil Nadu and Kerala is showing an upswing. This buying spree is expected to continue till January-end,” said James Jose, secretary, Association of Gold Refineries and Mints.

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