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Rediff News  All News  » Business » Gold heads for first Samvat gain in 3 yrs

Gold heads for first Samvat gain in 3 yrs

October 18, 2015 21:54 IST

Price up on weak dollar and strong demand

Gold is heading for its first Samvat gain in three years on a sharp rebound in global markets following a steep decline in the dollar and renewed physical demand.

Consumers and stockists are building their inventory amid fears of a resurgence in gold prices during the ensuing festive season.

Standard gold jumped 8.65 per cent from its recent low of Rs 24,850 per 10 gm on August 6 in the benchmark Zaveri Bazaar here to hit a high of Rs 27,000. But the rising trend took a break on profit booking by investors.

On Samvat 2071 (October 23, 2014) and Samvat 2070 (November 3, 2013), gold offered negative returns of 9.15 per cent and 4.42 per cent, respectively. On the occasion of muhurat trading this year, Samvat 2072, gold is set to touch Rs 29,000 per 10 gm.

On achieving this level, gold will offer over 5 per cent returns from the previous year and nearly 8 per cent from the prevailing level of Rs 26,930 per 10 gm.

“Expecting a rebound in prices, consumers booked huge quantities of ornaments when gold hit recent lows. Since consumers stay away from fresh buying during the inauspicious fortnight of pitri paksha, they booked gold for delivery during Navratri. Their deliveries have started now. Along with that quantity, there has been a huge demand from new customers as well as traders. Expect gold to touch Rs 29,000 per 10 gm this Diwali,” said Kumar Jain, director, Umedmal Tilokchand Zaveri, a Zaveri Bazaar-based bullion dealer and jewellery retailer.

Echoing this, Gnanasekar Thiagarajan, director, Commtrendz Research, said, “More than festive demand and Diwali purchases, the falling dollar is supporting gold’s price. In dollar terms, we are expecting gold to touch $1235 an oz, translating into Rs 28,500 per 10 gm.”

Global stockists are building their inventory for ornaments for sale during Christmas,  New Year and Mother’s Day celebrations, which constitutes nearly 30 per cent of their annual sales. In India, too, stockists start booking in large lots to meet the wedding demand ahead.

Jewellery demand has been robust so far this year, reflected in a surge in gold imports in the last few months. The World Gold Council forecasts India’s gold demand will be 950 tonnes in 2015.

“The onset of the festival and wedding season in India suggests healthy prospects for jewellery demand for the remainder of the year. And there are tentative signs that the recent drop in gold prices has lifted the appetite for gold in both China and India,” said a recent report by the World Gold Council.

According to Thiagarajan, gold scrap sales have been substantially low this year in India, indicating that consumers expect prices to remain firm.

Dilip Kumar Jha in Mumbai