Extending its losses, gold prices on Saturday dipped below the Rs 27,000-mark by losing Rs. 40 to trade at about 14-month low of Rs. 26,970 per ten gram. Gold, on Saturday, continued its slide with the precious metal falling below the Rs.27,000-mark to Rs.26,970 per 10-gram mark in Delhi, which is its 14-month low. In Mumbai, it had breached the Rs.27,000-mark earlier in the week and closed at Rs.26,790.
Market watchers attribute the fall to selling by gold stockists in India and a poor global appetite for gold. “The main reason is international cues with the strengthening of the U.S. dollar and the recent announcement that interest rates may be increased in early 2015,’’ said C. P. Krishnan, whole-time director, Geojit Comtrade, a commodity trading outfit. There has been a poor off-take of gold in its main consuming markets of China and India. “Considering that we are close to the festive season, the off-take has been quite poor in India,’’ Mr. Krishnan said, adding that India had seen a waning interest with import restrictions in place as also attractive alternative investment avenues such as a booming stock markets and real estate.
“If the rupee continues to hold its own against the dollar, then gold price could react further. There could be a pick-up in demand in the next couple of months during the festive season considering that the monsoon has been good,’’ he said.
International gold was at $1,216 an ounce. “It has breached the previous support level of $1,240 and the next support is at $1,180,’’ said Bhargav Vaidya, a consultant and director of India Bullion & Jewellers’ Association (IBJA). “In India, the premium has evaporated and although there may be an improvement in demand, there is unlikely to be any improvement in price in the near future.’’
According to Mr. Krishnan, the government seems to have pegged the dollar in the Rs.60-61 band, and depending on the dollar’s trajectory, gold could go even as low as Rs.24,500 levels by year-end.
