Gold lacks glitter

Image for representation purpose only.

Image for representation purpose only.  

Investors seem reluctant to enter gold in the absence of any catalysts to provide a direction to gold price.

Gold has been a favourite investment among the Indian households and individuals alike but despite prices ruling close to its three-month lows, there has been poor off-take of the precious metal.

On Monday it closed at Rs.26,220 in the Mumbai market, a gain of Rs.10.

Indian stockists have adequate stock and the playing out of the global scenario too has not prompted any significant ‘safe haven’ buying. “India and China account for more than 50 per cent of global gold demand and the melt-down in Chinese equity markets only rekindled investors to enter discounted equities. There is a general softening in the outlook for gold prices and there is barely any investment buying,” Bhargav Vaidya, Bullion Analyst and Advisor, India Bullion and Jewellery Association (IBJA) said.

*Festive season still a month away and rural demand, which accounts for a major chunk of demand, will materialise only post-monsoon.
Investors seems reluctant to buy gold in the absence of any catalyst to give a direction to gold price.

“Globally, as far as prices go, there is a short-term bearish trend. Commodity traders are keener on base metals rather than gold,” Vaibhav Chudasama, Analyst with commodity broking firm Geofin Comtrade, said. He said all eyes were on the U.S. dollar movement and the U.S. Fed rates.

Investors seem reluctant to enter gold in the absence of any catalysts to provide a direction to gold price. While gold mine production is up, the demand is down and there is a general shortage of liquidity in the market, which does not allow any buying momentum. Now, factors such as U.S. labour data, China equity crash and crude prices have impacted gold.

In India, the festive season commences only in mid-August. Rural demand for gold is a significant factor accounting for more than 60 per cent of physical demand.

“However, that can play out only after the monsoon when the cash comes in the hands of the farmers,” Suresh Hundia, President Emeritus, IBJA, said, adding, “I do not expect gold price to move beyond Rs.25,000-Rs.27,000 till August-end.”

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Printable version | Feb 19, 2020 6:13:38 AM |

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