Gold prices rose marginally by 0.74 per cent on Saturday, despite a weak buying sentiment, as jewellers returned to business after three weeks of strike on assurances from finance minister Pranab Mukherjee that the government would consider their demand.
Prices of standard gold with .995 per cent purity surged Rs 200 to close at Rs 27,895 per 10 gram in Zaveri Bazar here. The yellow metal in New Delhi spot market shot up by Rs 250 to close at Rs 28,390 per 10 gram. Similarly, silver shot up to trade at Rs 56,000 a kg in the local market here.
With Akshaya Tritiya, one of the biggest gold buying festivals later in the month (April 24), prices of the precious metals may rise further. Despite record high prices, jewellers sold 50 tonnes of gold on the occasion of Akshaya Tritiya last year, which was a rise of 20 per cent compared to the previous occasion.
Gold in futures also shot up. On the Multi Commodity Exchange (MCX), the precious metal for delivery in June surged 0.42 per cent to close at Rs 28,199 per 10 gram. Poled price collected by MCX showed the yellow metal was quoted at Rs 27,875 per 10 gram in the spot Ahmedabad market.
Lalit Jagawat, proprietor of Nakoda Bullion, a city–based bullion dealer, said majority of shops remained closed on Saturday, though the strike was called off early yesterday. Attributing it to expectations of a lacklustre response from customers, he said, "The real implications would be known on Monday when markets open fully."
The strike, according to Bachhraj Bamalwa, chairman of the All India Gems & Jewellery Trade Federation, led to an estimated loss of Rs 20,000 crore to the industry and Rs 700 crore to the exchequer.
On Saturday's price rise can partly be attributed to a sudden spurt in gold prices in global markets. Gold futures for delivery in June shot up $15.80 at $1,630.00 an ounce on Thursday, due to supportive statement from the Federal Reserve of the United States. While announcing the employment data, the Fed said fewer than expected jobs were added in March, which boosted prospects for the US to use additional stimulus measures to spur growth.
Against the economists' forecast for a gain of 205,000, payrolls climbed by 120,000 in March, the labour department said. Minutes from a Fed policy meeting released this week indicated the central bank would hold off on increasing monetary accommodation unless economic expansion faltered.
Bullion for immediate delivery gained 0.3 per cent to settle at $1,636.43 an ounce. Gold has surged 86 percent since the end of 2008, as the Fed held borrowing costs at a record low and bought $2.3 trillion in housing and government debt. Trade ranged from $1,620.70 to $1,634.60.
Ketan Shroff of Pushpak Bullions, a city-based bullion dealer, said, "Consumers buy gold when prices dip. We would see a robust Akshaya Tritiya if prices decline, as consumers no longer purchase gold based on emotional or occasional necessity. Hence, the price of gold would move in line with the prevailing demand trend in the coming season."
The dollar's movement against the euro would also be a deciding factor for gold prices in the coming days. The dollar climbed by about a cent to 1.3060 against the euro, after Spanish 10-year yields blew out to 5.80 per cent, the highest level since the European Central Bank launched its longer-term refinancing operation in December.
Prithviraj Kothari, president of the Bombay Bullion Association, had earlier said despite the long closure of the market, there was no shortage of gold availability in India.