Sugandha Sachdeva, assistant vice-president, research (metals), at Religare Securities, said, “Gold prices posted strong gains today after a report from the World Gold Council (WGC) stated China’s gold consumption might soar to a record 1,000 tonnes in 2013 and India’s gold demand might witness a surge amid the festival and wedding season in the country, which is round the corner. Rupee weakness added to the upside witnessed in domestic prices, wherein it (the rupee) plunged to a record low of 61.9850 in the spot market.”
The WGC has been bullish about annual demand. “It would be interesting to see how the (Indian) government’s controlling measures impact during the peak demand season, in the third quarter. But given that the government’s priority is the current account deficit, there will definitely be a short-term impact of these measures on gold demand. For the full year, however, we are convinced that total gold demand will remain at 900-1,000 tonnes,” said Somasundaram P R, managing director (India) at the Council.
The Reserve Bank’s new gold import norm announcement on Wednesday night raised concern about the metal remaining in short supply. Hence, gold in the physical market was continuing to trade at a Rs 800-850 per 10g premium to the landed cost of the commodity.
As mentioned earlier, the stock prices of jewellery companies dived on Friday, following withdrawal of the gold on lease’ facility by RBI. Shares of Titan Industries fell 12 per cent to close at Rs 240.6. Tribhovandas Bhimji Zaveri, Shree Ganesh Jewellery and PC Jewellers were down by six to eight per cent. Titan stopped selling gold coins a month earlier.
“This, once again, raises the spectre of increasing interest and hedging costs for jewellers. Titan’s fiscal year 2014 and fiscal year 2015 earnings per share can face a 6.25 per cent and 12 per cent cut, respectively,” analyst Abneesh Roy of Edelweiss Securities said in a note to clients.