The price of gold rose for the seventh day on the trot, adding 0.7 per cent in the Mumbai spot market on Tuesday to hit a new all-time high, and discouraging consumers from making fresh orders.
Standard gold in Mumbai’s popular Zaveri Bazaar has risen by three per cent, while silver is up by as much as six per cent during the past 10 days on global cues. While gold closed on Tuesday at Rs 39,083/10g, silver ended the day Rs 46,665/kg. After adding three per cent GST, consumers will have to pay more than Rs 40,000 per 10 gram of the yellow metal.
Gold is getting support both, in the domestic and the international markets due to favourable fundamentals. In India, consumers are engaging in need-based buying either by redeeming their investments in the monthly deposit schemes, or exchanging their old (scrap) ornaments for new. During calendar 2019, gold prices have jumped by 24 per cent in rupee terms, while silver has become costlier by 22 per cent. In dollars, gold and silver have become dearer by 19 per cent and 16 per cent respectively this calendar.
“Gold prices in India have rallied in 2019. Weakness in the Indian rupee against the dollar, geopolitical and economic uncertainty due to the US-China trade war and increase in import duty to 12.5 per cent from 10 per cent, were a few key reasons for the surge. US strikes in Iraq and Syria have increased geopolitical tensions in the Middle East, which could support crude oil and gold prices. Weakness in the dollar index has also supported gold prices,” said Abhishek Bansal, Chairman, ABans Group of Companies.
Since September 4, when gold hit a new record at Rs 39,031/10g, the bullion has moved up marginally after a Rs-2,000 correction gave investors a window to place new orders.
“We expect gold prices to hit $1,560/oz in the international market, or about Rs 42,500-43,000/10g in India following strong fundamentals. Uncertainty over the global economy, Brexit, the US-China trade war and the military intervention in the Middle East have made gold a safe haven for global investors,” said Naveen Mathur, Director (commodities and currencies), Anand Rathi Share and Stock Brokers.
Gnanasekar Thiagarajan, Director, Commtrendz, however, believes that there is more upside in silver than gold.
Meanwhile, the sharp increase in gold prices has seen buyers deserting jewellery stores. They are now opting to wait and watch for a correction amid weak demand.
“Despite the ongoing wedding season, gold demand is very weak with consumers possibly awaiting a correction. Overall demand has declined by 25-30 per cent since prices started rising about 10 days ago,” said Kumar Jain, Director, Umedmal Tilokchand Zaveri, a jewellery retailer in Zaveri Bazaar.