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Increasing gold prices putting off takers
Friday, 07 February 2003, 20:30 IST
NEW DELHI: Gold prices are shooting up, and there are very few takers in the Indian bullion and retail market, trade sources say.
Gaining in strength as war clouds hover over Iraq, gold price has been witnessing great volatility in international and domestic markets.
The yellow metal scaling a six-and-a-half-year high of around $390 per troy ounce before tumbling down to $371 in just a day saw a similar impact in India, with prices peaking to 
6,100 per 10 grams for 24 carat purity gold Wednesday evening and then sliding to 5,970 at the close of market Thursday night.
Gold prices may have scaled down but the market saw little business at the start of the day.
"There is no sale or purchase," Shri Krishan Goyal Chandiwala, general secretary of the Bullion Merchants Association, said.
"At the present level of price, which seems set to go higher till such time as the threat of an attack on Iraq seems imminent, the buying sentiment is very low. We have stopped purchasing as there is hardly any offtake."
India is the world's largest importer and consumer of gold, but the high prices have virtually brought imports to a halt.
India annually consumes 700 to 800 tonnes of gold. This year official estimates talk of a dip of over 30 percent in imports, done through designated banks and state-owned bodies like the State Trading Corporation of India (STC).
"Our imports have come down to a trickle in the last two months with gold prices ruling high. Ahmedabad and Jaipur, the main centres for gold demand, have virtually stopped offtake," said K.K. Sud, chief general manager of STC.
As against an annual import target of 20 billion, STC expects its gold imports to be around 15 billion.
"The whole of January was bad, and now February is also not bringing any respite from high prices," said Sud.
The state-owned channelling agency reported that several bullion traders have been calling in to cancel their orders, leaving it with no option but to go back to the supplier to hold back shipment.
Several banks have been reporting holding stocks of 10 tola (116.64 grams) bars with no takers in the last several weeks. The trade is mostly seeing movement of recycled gold or cash pressed jewellers offloading stocks to take advantage of high prices.
Retail traders are not seeing much business either, despite the wedding season when generally business looks up.
"The business in our areas is almost at a standstill, with just about 25 percent of normal sales during this time of the year. Other than urgent purchases, most people are holding back plans to make new purchases till prices stabilise," said Rakesh Saraf, general secretary of the Karol Bagh Jewellers Association.
Market analysts feel most Indians will be inclined to hold on to their stock of personal gold in anticipation of getting a better price in the days ahead if the prices rise in the eventually of an attack on Iraq.
On the other hand, the retailers are hopeful that the softening of gold prices will continue in the next few days to settle at $350 per ounce in global market, which would see Indian gold prices scaling down to a more acceptable level of 5,700 per 10 grams for 24 carat purity.
Source: IANS
6,100 per 10 grams for 24 carat purity gold Wednesday evening and then sliding to 5,970 at the close of market Thursday night.
Gold prices may have scaled down but the market saw little business at the start of the day.
"There is no sale or purchase," Shri Krishan Goyal Chandiwala, general secretary of the Bullion Merchants Association, said.
"At the present level of price, which seems set to go higher till such time as the threat of an attack on Iraq seems imminent, the buying sentiment is very low. We have stopped purchasing as there is hardly any offtake."
India is the world's largest importer and consumer of gold, but the high prices have virtually brought imports to a halt.
India annually consumes 700 to 800 tonnes of gold. This year official estimates talk of a dip of over 30 percent in imports, done through designated banks and state-owned bodies like the State Trading Corporation of India (STC).
"Our imports have come down to a trickle in the last two months with gold prices ruling high. Ahmedabad and Jaipur, the main centres for gold demand, have virtually stopped offtake," said K.K. Sud, chief general manager of STC.
As against an annual import target of 20 billion, STC expects its gold imports to be around 15 billion.
"The whole of January was bad, and now February is also not bringing any respite from high prices," said Sud.
The state-owned channelling agency reported that several bullion traders have been calling in to cancel their orders, leaving it with no option but to go back to the supplier to hold back shipment.
Several banks have been reporting holding stocks of 10 tola (116.64 grams) bars with no takers in the last several weeks. The trade is mostly seeing movement of recycled gold or cash pressed jewellers offloading stocks to take advantage of high prices.
Retail traders are not seeing much business either, despite the wedding season when generally business looks up.
"The business in our areas is almost at a standstill, with just about 25 percent of normal sales during this time of the year. Other than urgent purchases, most people are holding back plans to make new purchases till prices stabilise," said Rakesh Saraf, general secretary of the Karol Bagh Jewellers Association.
Market analysts feel most Indians will be inclined to hold on to their stock of personal gold in anticipation of getting a better price in the days ahead if the prices rise in the eventually of an attack on Iraq.
On the other hand, the retailers are hopeful that the softening of gold prices will continue in the next few days to settle at $350 per ounce in global market, which would see Indian gold prices scaling down to a more acceptable level of 5,700 per 10 grams for 24 carat purity.
Source: IANS