Domestic gold prices continued to slide tracking the weakness in global markets. While it opened weak on Monday at a multiple-months low of Rs.25,730 per 10 grams in Mumbai, it recovered to close at Rs.26,115. Internationally, there is a move away from commodities to equities and the Swiss referendum on Sunday overwhelmingly rejecting the move to raise gold reserves aided the price drop.
“The impact is already visible,” Nitin Nachnani, analyst, Geofin Comtrade, a commodity trading outfit said. “There is clearly a momentum downslide in gold and the Swiss referendum only added fuel to it.”
Analysts feel there is a resistance at $1,200 an ounce and the correction could take the price to $1,150. “In the domestic market, the crucial support level is at Rs.25,000 per 10 grams. However, it could reach Rs.24,200-23,500 levels by year-end,” Mr. Nachani said, adding that internationally, the end-of-year portfolio rebalancing by large fund houses could see gold and crude oil further fall out of favour with a marked preference for equities. “Commodities have been under-performers this year and there will be a move to equities which has been an outperforming asset class.”
Bhargav Vaidya, bullion analyst and board member of the India Bullion and Jewellers Association (IBJA), said that with the rejection at the Swiss referendum, “any debate on the revival of the gold standard is over. The global markets had discounted the negative vote and the bearish trend in gold is likely to persist.”
Scrapping of 20:80 buoys jewellery company shares
The 20:80 scheme was a hindrance for trade and Mr. Vaidya said it had failed. “With the problems of current account deficit (CAD) abating due to falling crude oil prices, it made eminent sense to withdraw it.”
Several jewellery stock prices spiked on Monday with major gainers being Shree Ganesh Jewellery House, which rose by 20 per cent to Rs.27.90.
Tribhovandas Bhimji Zaveri increased by 19.28 per cent to Rs.179.10, Gitanjali Gems by 19.86 per cent to Rs.60.10, Titan Company by 5.3 per cent to Rs.389.65 and Rajesh Exports by 3.38 per cent to Rs.172.95.
Government reduces import tariff value on gold, silver
The government on Monday reduced the import tariff value on gold to $388 per 10 grams and on silver to $540 a kg, following global price trends. The tariff value on imported gold was at $401 per 10 grams and silver at $575 a kg for the last fortnight of the previous month. — PTI
