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Gold trade sees silver lining in range-bound price movement

The movement of gold prices in the past fortnight within a range of ₹37,000-38,000 per 10 gm has fuelled hopes of a revival in sales from Navratri.

August and September have been the worst period for gold trade in two decades with a near 60 per cent slump in demand.

“Though there has been a little bit of recovery in the market after gold prices came down from ₹40,000 per 10 gm to ₹38,000, it cannot be described as a major improvement. However, with price settling at ₹37,000-38,000 per 10 gm, everyone is hoping that from Navratri, things will be better,” Surendra Mehta, national secretary of the India Bullion & Jewellers Association, told ET.

Internationally, gold prices had shot up since August because of geopolitical reasons like the Sino-US trade tensions, political unrest in West Asia and uncertainty over Brexit. On September 5, gold crossed the ₹40,000 mark.

The hopes of a demand revival will, however, fizzle out in case the geopolitical situation worsens. “If there is no escalation of trade tension between the US and China, then hopefully the price will move in the current range. That will bring a decent business for gold trade. Also, with the recent tax cuts, the Indian economy is expected to be bolstered which will boost demand in the festive season,” said Ajay Mehra, chairman at PHDCCI, gems and jewellery committee. Gold prices were steady on Tuesday in international markets, rising to a more than two-week peak in the previous session on fears of global slowdown and tension in West Asia, while an improved Sino-US trade tone, too, weighed on the yellow metal. Spot gold changed a little to $1,521.24 per ounce. US gold futures were down 0.3 per cent to $1,527.10 per ounce.

“If the rupee remains strong against the dollar, then gold prices may not see an upward trend immediately. Also, the equity market is rising. That may dampen the gold price in Indian markets. Festive season buyers are not generally investors. Jewellers will also buy and there will be purchase for the upcoming wedding season too,” Gnanasekar Thiagarajan, cofounder and CEO of Commtrendz Research, said.

Courtesy - ET

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