In the wake of a weakening rupee, gold prices have continued their northward journey, scaling a new record high of Rs. 35,074 on Wednesday on the Multi-Commodity Exchange (MCX). It was up Rs. 817 (2.42 per cent) at Rs. 34,532 late Wednesday evening on the MCX. International gold moved up $3 at $1,423.7 per ounce.
The fast-depreciating rupee has been a significant factor in the rising prices of gold in India.
Interestingly, gold price here spurted from Rs. 25,000 per 10 gram levels in mid-April 2013 to the current levels but the same is not true of the rise in international markets where it rose around 20 per cent since its three-year low of $1,181 per ounce in June.
“The rupee depreciating around 19 per cent this year is the significant factor,” Sugandha Sachdeva, Assistant Vice-President & Incharge, Metal, Energy & Energy Research, Religare Securities, told The Hindu.
“The imposition of the higher import duty, too, is an important component of high price here. Discounted though, the surge is also partly due to it.”
Vinod Jain, President, Mumbai Wholesale Gold Jewellers’ Association, said the Indian consumer was now confused. “Investors have been selling physical gold but not in expected volumes.” Being totally dependent on the rupee-dollar dynamics, the possibility of further rupee depreciation was holding back gold sellers, he said/ “The gold market is dormant. Buyers are few as the new highs are uncharted territory and sellers are awaiting a further rise,” he pointed out.
Rising tensions in Syria led to gold scaling a three-and-a-half month high on the international market. “Besides being a counter-rally to the downtrend in gold seen earlier internationally, there is strong demand in China and ‘flight to safety’ factor globally for gold,” Ms. Sachdeva said.