Gold Market Dazed as India Gives Miss to Festive Gusto
Source: Commodity Online, Rutam Vora (8/23/10)
"Indian jewelry makers are bewildered by lack of gold demand during festivals."
In India, MCX Gold for October contract traded at Rs.18698 per 10 grams, which was down by Rs.29 per 10 grams. In the spot markets as well, the prices remained lower. Gold Ahmedabad hovered at Rs.18660 down by Rs.65, while Gold Mumbai traded at Rs.18696.25 down by Rs.25 from its previous closing. But the overall trend in the gold prices showed steep rise over past several months. The yellow metal has appreciated by 6% so far during the year.
The onset of two big festivals has failed to draw big fat Indian jewelry buyers, who are one of the largest gold consumers in the world. Suresh Hundia, president of Bombay Bullion Association (BBA) mentioned that the despite the beginning of the festive season in the Indian subcontinent, the demand seems to be sluggish owing to higher gold prices.
"We see only 50% demand from what we had seen last year. The jewelry buying has not picked up well in the country despite the festive season standing right around the corner. This is mainly due to peak prices, which are hovering at around Rs.18,800 per 10 grams," Hundia said.
However, market analysts believe gold prices do not seem to be falling so significantly in the near term from its current levels; hence the present prices might not discourage buyers to that extent as has been feared.
The industry experts are of the opinion that the buyers may not give too cold response to the festive discounts and offers given by the jewelry stores.