[1]A combination of international uncertainty, economic problems and strong demand from consumers has pushed gold prices to a new record. On Tuesday, gold prices in Delhi shot past Rs 19,000/10 gm. In Mumbai, gold prices closed at Rs 18,840/ 10 gm. Silver prices were also up in the day’s trade.
“European uncertainty is definitely playing a major role in pushing up gold prices,” says Mr Kuljeet Kataria, head (commodities), Motilal Oswal. “Other asset classes such as stocks have been volatile over the past week and investors are moving towards gold again,” he says.
The total volume of gold held by SPDR gold shares — which is similar to a mutual fund — is now an all time high of 1,267 tonnes. While most Indians prefer buying gold in the physical form, electronic traded funds now offer an option to buyers. Several mutual fund houses now have gold funds on their offer.
Most large banks in India also sell hallmarked gold coins — though they are not allowed to buy them back.
Interestingly, he points out, gold prices had hit an all time high internationally some weeks back — at $1,248/oz. However, the Indian rupee has fallen against the dollar in the interim, leading to higher prices in India.
However, inspite of the higher prices, demand for gold doesn’t seem to be falling. In a recent report, World Gold Council, an industry body, had said that India’s gold imports were up sharply during the period between January and March 2010, compared to the last year.
The six-fold jump in demand signified that consumers have accepted the high prices, the report said. According to WGC, India’s net gold demand in the first quarter of 2010 was 193.5 tonnes, with jewellery accounting for almost 75 per cent.
Looking at the overall scenario, gold prices are expected to remain stable, says Mr Kataria.
“This is not a good time to buy gold, though investors can remain invested in the yellow metal. Prices are likely to fall by the Diwali season,” he adds.
Links:
[1] http://103.241.136.51/busi06021jpg-906