Gold trade looks brighter with prices set to go up

Thursday, 23 January 2003, 08:00 Hrs
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NEW DELHI: Gold prices are expected to scale higher than the current levels of 5,850 per 10 grams of 24-carat purity, the highest in six years, say industry experts.

With gold peaking Wednesday to new levels of $360 per troy ounce in international markets on fears of an attack on Iraq and continuing uncertainty on the global economic front, the Indian market too responded with an increase in the price of the precious metal.

Often referred to as a price sensitive market, Indian consumers are however not shying away from buying despite the bullish trend in prices, say leading jewellers.

"With customers expecting the upward movement in prices to continue, we have been having good sales for the last one month and there is no let-up even now.

"In view of the continuing global instability on both the political and economic fronts, we expect the price to scale further and cross 6,000 per 10 grams in coming days," Kuldeep Bhola, a partner in Bholasons Jewellers, a leading retailer and exporter, told IANS.

While some people are using the current high price to sell old jewellery, there is also more exchange of old gold for new items.

"With the expectation of the prices going up higher, there is less of selling and more of exchange and fresh buying as the marriage season is still on," said Rakesh Saraf, a leading jeweller and general secretary of Karol Bagh Jewellers Association.

The retailers said though the volume of purchase in some cases is less than that during the same period two years ago, the higher value will make up for that.

Expectations of global gold prices touching $380 per troy ounce in the coming days will result in domestic prices crossing 6,000 per 10 grams given the greater convertibility of the dollar in the last six years, say traders.

In India, twice during the last six years, the gold price touched 5,800 per 10 grams and then slumped. In 2000, it even came down to 4,200 but scaled up again.

The gold market now expects a similar trend though it may not touch the lows of two years ago.

Said Bhola, "With prices expected to go higher, the inclination is to go in for new purchases. We expect the sales to increase in the days ahead."

The biggest importer and consumer of gold, India witnessed a drop in imports in 2002 with global prices showing great volatility.

The last quarterly report of the World Gold Council had revealed that total Indian gold imports were around 362.4 tonnes between January and September 2002, a drop of around 54 percent compared to 670.5 tonnes in the same period a year earlier.

During July-September, despite the high prices, imports by India picked up almost close to the previous year's level, with inflow of 116.4 tonnes compared to 127.2 tonnes in the corresponding period in 2001.

"It is not the housewives who are using the opportunity to sell old jewellery, but mainly small traders who are exchanging their old stock.

"In some cases, according to market reports, jewellers who are not doing too well are using this opportunity to dispose of part of the stock for (cash) liquidity," said G. S. Pillai, President Aerens Infrastructure and Technologies Ltd, which is planning 10 gold souks in the country with one already under construction in Gurgaon on the outskirts of the capital.
Source: IANS
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