Gold price retreated on Saturday after scaling a monthly high of Rs.28,585 per 10 gram in Mumbai on Friday. The yellow metal reacted on unwinding by stockists by Rs.190 to close the week at Rs.28,395.
The prevailing uncertainty in the global political climate as also a weaker rupee saw gold prices spurt last week with the three-day run gaining over Rs.650. Experts feel the price could hold given gold’s ‘safe haven’ status in times of strife.
Navneet Damani, Associate Vice-President, Motilal Oswal Commodity Brokers, told this correspondent that the economic data from the U.S. had been positive, which had buoyed the dollar and put pressure on gold but given the geopolitical situation with the U.S. President ordering air strikes in Iraq and trouble in Russia, gold price strengthened. “There are no new demand-side developments and gold price is only reacting to global developments,” Mr. Damani said.
Experts felt that gold’s run in the domestic market too was on the back of the rupee’s depreciation against the dollar.
Prithviraj Kothari, Vice-President, India Bullion & Jewellers Association (IBJA), said domestic gold was more impacted by the rupee depreciation and the global developments rather than other factors.
Experts felt the monsoon had only a marginal impact on gold price. The impact, if any, would happen with a lag effect as a good crop puts more money in the hands of the rural buyer who accounts for 65 per cent of Indian gold demand.
Mr. Kothari said the upcoming festive season would see demand met by gold scrap. “There is a lot of scrap coming in and people are converting older jewellery rather than buying of new physical gold. Retail buying will only come in if gold rate falls below Rs.27,000 levels.”
With equity markets booming, Mr. Damani did not foresee any spike in festive buying till Diwali. “Gold can move in a price band of Rs.28,200-30,300 in the medium-term. The price direction is not very clear now and one cannot underestimate the impact of further geopolitical developments.”
