Gold may slip below Rs 10,500 by end of Sept

MUMBAI: In line with the sharp fall in price in global markets, gold price in India is expected to fall below the Rs 11,000 mark per 10 gm by September, a top industry official said.

“Gold prices have witnessed a steep fall in line with the global markets and are likely to drop further and may touch the Rs 10,400 to Rs 10,600 per 10 gm-mark by September-end,” said Bombay Bullion Association (BBA) president Suresh Hundia on Sunday.
Domestic gold prices in July saw an inverted U-shaped trend. Trading initially at Rs 12,900 per 10 gm, it reached the peak of Rs 13,567 per 10 gm by mid-month before beginning its downward journey at the end of the month and finishing at Rs 12,557 per 10 gm, much below the level it had initially begun.
The gold price dropped from Rs 12,705 on July 26 to the present level of Rs 11,300 per 10 gm in the local bullion market. In the international market, the yellow metal dipped below $800 an ounce for the first time since December 2007.
As US economists see improved prospects for its economy, the dollar could be more attractive as an investment, particularly in times of crisis, making gold less lustrous like other precious metals. In the domestic market, gold demand has already started picking up and people have advanced their purchases before Diwali and wedding season, following a sharp decline in prices, bullion traders said.

Market participants expect the metal to test further lows in line with the steep fall in prices.

“The metal is losing its social value and more dependent on the foreign exchange,” said All India Sarafa Bazar president Sheel Chand Jain, adding that every rise in dollar would reduce the appeal of the metal. He said easing crude oil prices have also eroded the demand for gold as a hedge against inflation.
Gold in overseas markets hit an intra-day low of $773.90 an ounce, its weakest since November 20 last year, down from $811.25 late in the New York on Thursday as the dollar firmed up to a six-month high against the euro. Crude oil prices fell to $111.34 a barrel on demand fears. Bullion traders said prices would see more lows in the next few days following a fall in demand among stockists and jewellery fabricators.

Overall, there has been a shortfall in demand for physical gold in India, which usually stands at about 800 metric tonne annually. According to the BBA, India’s gold imports have fallen by almost 50% in the first quarter. BBA statistics said gold imports in the first quarter of this year is 101 metric tonne against 193 during the same period last year.
thanks to: economictimes.indiatimes.com/