Close on the heels of the government announcing measures to reduce the availability of gold in a bid to address the worrying current account deficit (CAD), gold price, on Friday, saw a fresh spurt owing to stockists’ buying ahead of the festive season.
Commodity watchers attribute the spurt to gold’s ‘safe haven’ status amid weak equity markets and lack of investment avenues.
While 99.5 per cent pure gold price moved up in Mumbai to Rs.30,695 per 10 gram (Rs.29,520), in Delhi it zoomed by Rs.1,310 (per 10 gram) to Rs.31,010.
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Gold revisited the Rs.31,000 level after six months, having scaled a historic high of Rs.32,975 (per 10 gram) in end-November 2012. Late evening on the Multi-Commodity Exchange, gold was steady at Rs.28,600; up Rs.123. On the wide disparity in the price movement in different cities, C. P. Krishnan, Wholetime Director, Geojit Comtrade, a commodity trading firm, said it was more a factor of demand and supply. “While there is less gold available overall in the markets, there was a shortage in Delhi. It is no doubt a very choppy market and soon, more gold could be made available there and prices may re-adjust”.
Commodity watchers say the spurt is largely due to stockists’ buying ahead of the festive season. “Besides the weak rupee, stock markets have remained under pressure and it is quite natural for investors to look for a ‘safe haven’ which gold provides in the absence of other investment avenues,’’ said Suresh Jain, Director, Bombay Bullion Association.
There was also strong buying in China. “International prices were up on August 15 when Indian markets remained closed and so the gap was quite high today [Friday],” Mr. Krishnan said. “While the unrest in Egypt resulted in crude also firming up internationally, China is a major factor for gold price rise. Improving European economies means Chinese exports may pick up in future and their investment in gold too will rise. It is believed that China may soon overtake India as the leading gold importer”.
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