Gold sales shine on rising rupee

While Gold Rose Globally By $5 Over Weekend, In India Parity Price Fell By Rs 100

THE appreciation of the rupee has stemmed the gold price rise for domestic buyers. As the rupee steadily moved up against the dollar, from Rs 44 to Rs 42 in the last month, the gain in the net rupee value of gold has been buffered to an extent. "Gold price has steadily been climbing in the international market, but with the rupee rising against the dollar by over Rs 2 in the last month, the net gain in gold price is about 2% against what would have been 7-10%," said Mehul Choksi, chairman, Gitanjali Group. As a result, the demand for gold is slowly picking up, although it is much lower compared to the same period last year. With the wedding season on, and Akshaya Tritiya, considered an auspicious day to purchase gold approaching, the rupee appreciation is seen as a saving grace. Offtake of wholesale gold has been much lower this year, at about 400-500 kg per day in the Mumbai market, almost half of the previous year's business due to the high gold price. "If gold falls in the international market, then the demand would definitely pick up. A good price would be between Rs 9,100- Rs 9,200 per 10 gm," said Suresh Hundia of Bombay Bullion Association. On Monday, rupee closed at 41.85 to a dollar, the highest in nine years. Even as gold appreciated internationally by more than $5 over the weekend, from $684 per ounce on Friday to $689 levels on Monday, in India parity price fell to Rs 9,424 per 10 gm from Rs 9,502. The rupee gained by over 60 paise from Friday. International gold touched nine-week highs on Monday, on the back of a weak dollar and anticipation of demand for the metal as a hedge against inflation.

Courtesy: EconomicTimes