|HOME | MONEY | GOLD | WEEKLY REVIEW|
|November 13, 1999||
Diamonds in, gold out
Indian gold prices, which were under modest pressure during Diwali, surprisingly bounced back on the conclusion of festival season.
"The festival demand for gold in Diwali was lower than expected," a jeweller at the Zaveri Bazar said, adding "but gold attracted speculative buying after Diwali amid tight supplies and news of recovery in the international market."
24-carat gold at one stage dropped to Rs 4580 per 10 gms from Rs 4600 but later went up to Rs 4650. Likewise, 22-carat gold initially fell to Rs 4240 from Rs 4255 and then moved up to Rs 4300. Prices of gold biscuits (116.65 gms) earlier fell to Rs 53,600 per piece from Rs 53,900 and later climbed to Rs 54,500.
Gold prices in the global market were down at one stage to $288-$289 per ounce and then bounced back to $296-$297. It was last quoted at $293-$294. "Overseas supplies are tight and frequent seizures of contraband gold has kept the arrival of smuggled gold at a low-ebb" one bullion dealer said.
The Diwali demand for gold was hardly 30-36 per cent compared to last year. "Festival buyers were waiting for prices to stabilize and before they knew it Diwali was over!" a bullion broker remarked. "We have also witnessed some switchover of festival buying from gold to diamond in Diwali this year," he added.
"Aggressive promos carried out by diamond giant De Beers has improved the demand for diamond during Diwali. However, this has also helped gold off-take as diamonds are traditionally set in gold" said Dinesh Parekh, director, Bombay Bullion Association(BBA). He is of the opinion that increased discounts and gift bonanzas offered by gold jewellers helped boost sales.
According to Mukul Sonawala, president of the BBA, international gold prices are bottoming out at the $290 level. "Gold markets in India are likely to attract fresh demand from December since it is the beginning of the wedding season which will last upto the summer of 2000," said Sonawala.
Experts are adoptiing a cautious approach as a fresh auction from the Bank of England is round the corner. According to Parekh, the Bank will sell 25 tonnes of gold from its reserve on 29 November. Earlier, the Bank had auctioned 50 tonnes of gold in two phases in July and September this year which pulled down global gold prices to a 20-year low.
Also, rising gold production in Russia may depress prices in 2000. Russia has produced about 110 tonnes of gold in the current year and the production is expected to touch 130 tonnes next year.
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