Samvat 2069 : Gold falls, silver gains

Last Updated: Wed, Nov 14, 2012 04:49 hrs

Samvat 2069 began with a marginal decline in gold prices in Zaveri Bazaar here due to lack of business activity on Diwali, the first day of the Hindu calendar, as bullion dealers ended the day with puja and celebrations after recording the prices of precious metals in their annual handbooks.

Standard gold lost Rs 100 to trade at Rs 31,800 per 10g on Tuesday compared to Rs 31,900 per 10g on Monday.

In contrast, silver remained a preferred substitute among retail buyers, resulting in it being traded at a premium of Rs 800-900 over the imported cost. The metal also gained Rs 400 from the previous evening's closing price to settle at Rs 62,300 a kg.

"Silver has outperformed gold in the last two months with over 20 per cent returns. The metal fell to Rs 53,500 a kg and recovered later to Rs 64,000 a kg. Against that, gold has offered just five to six per cent returns in the same period. This raised hopes for investors to grab a share in the commodity, which has immense potential for price rise," said Rahul Mehta, managing director of Silver Emporium, one of the largest silver dealers in Mumbai.

Silver in India gave 12.84 per cent returns in Samvat 2068 to end the year at Rs 62,365 a kg from Rs 55,270 a kg the same day of the previous year. Gold gave 12.05 per cent returns during Samvat 2068.

Interestingly, the returns in both precious metals can largely be attributed to the equal depreciation in the rupee against the dollar. The rupee depreciated by 10.84 per cent to close the year on Monday at 54.9 to a dollar.

In dollar terms, however, gold has given a negligible 0.53 per cent return to settle at $1,733.93 on Monday. Silver, however, offered a negative return of 2.71 per cent to settle at $32.51 an oz during Samvat 2068.

"Had the rupee not depreciated, investors would not have got any returns this year," said Prithviraj Kothari, president of the apex bullion trade body, Bombay Bullion Association, and the managing director of Riddi Siddhi Bullion Ltd, a leading Mumbai-based dealer.

The returns in gold and silver for Indian investors remained the lowest in four years. The major hindrance for a positive sentiment in precious metals, according to Ketan Shroff, director with Pushpak Bullion, was the import duty which in January was doubled to two per cent and later in March raised to four per cent.

Kothari, however, forecast demand for bullion to depend on its price. "The scheduled wedding season beginning next month would determine the fate of bullion dealers for future. But, high price continued to prove a deterrent for buyers," he said.

Meanwhile, gold for delivery in December gained 0.11 per cent to Rs 31,812 per 10g in muhurrat trading on the Multi-Commodity Exchange. Far month contract i.e. for delivery in June 2013, in contrast, declined a marginal 0.06 per cent to trade at Rs 32,910 per 10g at 6.20 pm on Tuesday.