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Take a break from bullion buy, correction on course
Suresh Nandi, Mumbai, Nov 28, DH News Service
Now that the price of the precious yellow metal has touched an all time high of Rs 18,000 per ten grams, the demand for gold is at an all time low, say gold jewellers and importers here.
So much so, that traders were prompted to curtail their imports of gold. “There is virtually no demand for new gold jewellery in the market,” says Suresh Hundia, President, Bombay Bullion Association (BBA) and points out that gold imports have dropped nearly 50 per cent as compared to the same month last year.
Elaborating, Hundia says that in the month of November last year as much as 34 tonnes of gold were imported, while the import of the precious metal this November is less than 20 tonnes.
Dollar impact
Bullion experts also point out that the weakening of dollar in the American markets on the one hand and the demand for gold as a hedging security has caused the hike in the prices of yellow metal to such a level. In this context, Harmesh Arora, Vice-President of BBA, points out that even in peak marriage season, demand has not picked up. Though gold was always seen as a safe bet, Arora maintains that currently investors in international market are not confident over the future of the dollar as a currency.
Besides, the buying capacity of general public has diminished completely. “What you see in the market now is pure speculation and only speculators are doing all the buying now,” Gold Chains & Jewellery Wholesalers Welfare Association President Hasmukh Bafna said.
It may be noted the price of gold in 1980’s had touched an all time high of US$856 per ounce then and within a short period it fell to US$580 per ounce. “In a span of 10 years through 1980 to 1990, gold price had plummeted to just US$282 per ounce,” Bafna said, adding that a similar correction could be in the offing and went to the extent of predicting that the price might dip to Rs 16,500 levels per 10 grams. The current spur in the gold prices are due to speculators anticipating the price could rise to Rs 25,000 level. This could happen only if the dollar price fluctuates further but then a contrarian speculation is also rife anticipating a correction in the near future and the price should stabilise between Rs 15,000 to Rs 16,000 levels soon. Also, if the Indian government, which has already bought 200 tonnes of gold from IMF, decides to buy more gold for its depository, then prices may rise further. The Chinese government reportedly also has similar plans, which could also impact the gold price.
So much so, that traders were prompted to curtail their imports of gold. “There is virtually no demand for new gold jewellery in the market,” says Suresh Hundia, President, Bombay Bullion Association (BBA) and points out that gold imports have dropped nearly 50 per cent as compared to the same month last year.
