On Monday, gold continued its upward march for a seventh day at Zaveri Bazaar, boosted by robust festive demand from consumers, who seemed to have reconciled to the fact that prices would remain high.
Bullish guidance from global markets aided the process and silver followed. Standard gold jumped by 0.8 per cent or Rs 250 a gramme to close the day at Rs 31,900 for 10g (the record was set in September, at Rs 32,200 for 10g). Silver closed with a gain of one per cent or Rs 605 to Rs 62,365 a kg.
The price rise hardly impacted consumers’ enthusiasm on Dhanteras, the most auspicious day of the season for buying a piece of precious metal, which was yesterday. Traders estimate 2.5 tonnes of gold sales by bullion dealers and jewellery retailers yesterday, a 30 per cent increase from the same day last year. Consumer spending was robust, in anticipation of a further price spurt.
“Gold has given just seven-eight per cent returns in the past year, against a sustained 35 per cent compounded profit in the past five years. It remained resilient to a certain extent this year, due to ongoing economic concerns in the US and Europe. The metal, therefore, holds potential to respond as usual positively to a dwindling global economy, when investors book gold as a safe haven,” said Ashok Minawala, ex-chairman of the All India Gems and Jewellery Trade Federation. He forecast the price would hit Rs 33,000 for 10g before the end of this year.
Gold edged higher in Europe this morning on continued safe haven buying, prompted by worries that the US could return into recession if the fiscal deficit was not controlled. Spot gold in London was quoted at $1,736.65 an oz, higher by $6.5 an oz from Friday’s close. The metal, however, traded in a thin range of around $5 this morning. Silver was trading with a marginal decline of 10 cents, at $32.70 an oz.
The rupee’s depreciation against the dollar was the biggest supporter of gold’s price rise in India. The rupee depreciated to close the day at 54.88 a dollar, a decline of 0.1 per cent. The currency has fallen a little over five per cent in recent weeks. Similarly, the euro was battling against a stronger dollar after it hit an intra-day low of 1.2695. It was trading at 1.2705 against the dollar in early trade on Monday.
This festive season, however, a distinct change was witnessed in purchases. “Consumers are skewed towards jewellery this season, unlike the past few years when investment products, including coins and bars, were preferred. Mandatory hallmarking has changed consumers’ sentiment, especially for ornaments’ resale value. Hence, despite higher prices, jewellery consumers are opting for ornaments over coins and bars,” said Rajesh Mehta, managing director, Rajesh Exports, a leading gold jewellery manufacturer and retailer.
According to Rajiv Popley, director of the Popley Group, another leading jewellery producer, there is a preference for lightweight designer jewellery this year, due to rising gold prices.