Prices of gold, India’s traditional store of value, breached the record of Rs 40,000 per 10 gram for the first time locally due to mounting concerns of stagnating global growth and a protracted slide in the rupee – factors likely making bullion even costlier in the wedding and festive season.
During the workday, gold hit a fresh high of Rs 40,170 per 10 gram, inclusive of 3 per cent GST. Shankar Sen, CMD of Kolkata-based Senco Gold, said the yellow metal “could hit Rs 43,000-44000 per 10 gm by October, when Indian demand tends to revive after a slack season.”
Prices of silver, also a store of value in parts of India, climbed to three-year highs.
To be sure, some jewellers and analysts don’t entirely rule out a short-term correction in gold prices that have rallied overseas by a fifth in the past three months. A resolution of the trade issues between the US and China could revive demand for risk assets, likely limiting further demand for a safe-haven asset such as gold, said Sen.
Globally, gold hit a fresh six-year high of $1,555 an ounce before cooling off to trade at $1,530 intraday Monday on the possible resumption of trade talks between the US and China.
Gold prices in India are influenced by the metal’s overseas rates and the rupee. India is the second largest consumer of the metal after Greater China, with consumer demand at 760.4 tonnes in 2018.
Almost the entire demand is met through imports. India net imported 755.7 tonnes last year, according to World Gold Council (WGC). The rupee has weakened about 3 per cent in the past three months, accounting for the higher rate of climb — at 22.2 per cent — for domestic spot prices of gold.
On Comex, the largest derivatives marketplace for precious metals, option traders have created the largest open sell positions at the $ 1,500 strike expiring 90 days from now. Option traders are pegging a three month range of $1,407-1,593.
Nitin Kedia, business head of Kedia Commodity, said the medium to long-term trend for gold continued to remain positive due to the global economic uncertainty.
Courtesy - Economic Times