Gold prices rebounded on Friday on bargain hunting, mostly by consumers in India and China, the two biggest demand drivers of the yellow metal. Trading around $1,350 an ounce two days earlier, it was $1,410 an ounce on Friday in the international market. At Zaveri Bazaar here, it has risen by ` 580 in the past two days, with a jump of Rs.340 per 10g on Friday, to close at Rs.26,260.
Silver also rose marginally by Rs.90 a kg to Rs.46,125 a kg. It was up Rs.640 in the past two days. Both the metals fell over 10 per cent in the past week.
Rajiv Popley of Popley and Sons said, “Yesterday was Guru Pushya Nakshatra and on Friday being Ram Navmi, both considered auspicious for buying gold in India, demand is up 30 per cent compared to normal-day gold demand. Consumers are buying both jewellery and coins.”
Jewellers say consumers feel the current price is a good level to buy, at least for those who need it for the coming marriage season. Popley said, “There is a general feeling that gold prices could appreciate in the short term. We also feel the rupee might fall against the dollar in the coming weeks, which itself will keep gold prices elevated in the Indian market.”
Aram Shishmanian, chief executive, World Gold Council, said: “The recent sharp fall in gold prices was triggered by speculators. Long-term investors have entered the market, as evidenced by the massive wave of physical gold buying that began over the weekend and accelerated following Monday’s further decline. The surge in gold purchases is spanning markets from India and China to the US, Japan and Europe.”
Early this week, several small traders were not able to sell gold, for lack of stock as prices fell. They are waiting for prices to stabilise. Shishmanian of WGC said, “We are already seeing shortages for bars and coins in Dubai, while premiums in Mumbai are at $26/oz and $6 in Shanghai, indicating that buyers are willing to pay more than current spot prices for the metal.” A premium of $26 an ounce works out to ` 450 per 10g.
However, outside Zaveri Bazaar, traders still feel the prices might fall further. Ajay Kedia of Kedia Commodities, who tracks gold in terms of its movement against many other commodities and specialises in spread trades, said: “Indications that the US Fed will not continue its easy liquidity for long, downgrading and liquidating gold holdings by major fund houses and technicals suggest that the fall in gold is not over yet and a further 10 per cent fall is not ruled out in the next few months.”
Source: Bullion Bulletin