Headlines
Gold prices in India plunge to lowest in two years
New Delhi/ Mumbai/Chennai/ Bengaluru/ Kolkata, July 20
Gold prices in India dipped further on Monday to below Rs.25,000 per 10
grams - the lowest in two years - with the precious metal losing its
sheen on account of bulk sales in China and hopes of rate hike in the
US.
With festive season some two months away, stakeholders were
divided over the demand and the trend in prices in the medium term, even
as the country continued to rank among the top three importers and
consumers of gold.
According to reports, some 33 tonnes were sold
in the Shanghai spot market on Monday as investors sought to shift
focus to other avenues, primarily expecting the US Federal Reserves to
increase its interest rates for the first time in nearly a decade.
The price of gold in Bengaluru, for example, dipped to Rs.24,390 per 10 grams - the lowest since April 2013.
"Rate
remained at Rs.24,390 per 10gm in the local market, same as on previous
two days after declining from Rs.24,450 on Friday and Rs.24,740 on July
12 due to lower demand and negative sentiment," Venugopala Shetty,
proprietor of Ganesha Jewellers, told IANS in Bengaluru.
"It is
expected there will be huge demand in a day or two," said Rahul Gupta,
director of the Delhi-based P.P. Jewellers told IANS. "The situation is
almost like that of April 2013 when the price dipped to Rs.25,500 per 10
grams and the demand surged overnight."
The development on Monday came despite India overtaking China as the largest importer of gold, at 769 tonnes in the last year.
"We
expect the gold prices to fall by another Rs.30-40 per gram (22 carat)
and settle down there," N. Anantha Padmanabhan, managing director of NAC
Jewellers, told IANS in Chennai.
The falling gold price also
pulled down the prices of silver. "Currently silver is priced at
Rs.36,500 per kg. We expect it go down to Rs.35,000 per kg," said
Padmanabhan. Noting the US dollar is strengthening and the interest
rates are expected to go up there, he said that hence there is pressure
on the gold prices.
The demand for gold in India for the first
quarter (January-March) of 2015 was at 191.7 tonnes, up by 15 percent as
compared to the corresponding period of 2014, World Gold Council (WGC)
said in a report. Total jewellery demand in India for first quarter of
2015 was up by 22 percent at 150.8 tonnes as compared to 123.5 tonnes in
Q1 of 2014.
"The current downswing in Indian gold prices is
directly related to the strengthening of the US dollar in recent times.
We are hoping that the present trend may be arrested soon and the prices
could stabilize within a month or so," said Mumbai Jewellers'
Federation president Rakesh Shetty.
However, this fall in gold
prices - the lowest in the past five years - has spurred the demand in
gold and other precious metals and we expect a buoyant market by Diwali,
he added.
"There is a meltdown in the international commodity
market in the last three-four weeks. But today the prices fell sharply
as China sold around 6,065 tonnes of gold in the morning," Bachhraj
Bamalwa, partner, Nemichand Bamalwa and past chairman of All India Gems
and Jewellery Trade Federation told IANS.
He also mentioned that it is difficult to predict the price trend in the future.
"Gold
is a hedge commodity and people tend to invest in the yellow metal when
the global economy is hit. Now with the global economy seemingly
recovering and the US dollar appreciating, people are investing in other
options except gold," Premjit Sengupta, chief marketing officer, Senco
Gold Ltd said in Kolkata.