MUMBAI: Precious metals are having a golden run.
Gold prices on Monday jumped by over Rs 1,500 to record Rs 71,100/10gm crossing the Rs 70,000-milestone for the first time amid heightened geopolitical risks and aggressive buying by central banks. Silver, too, joined the party, crossing the Rs 80,000/kg-level for the first time as prices jumped by Rs 2,000 to Rs 81,200/kg. High gold prices have, however, dampened jewellers’ business as sales are down more than 50% from the year-ago period, jewellers said.
In global markets, gold prices went past the $2,300/ounce mark recently and were nearing the $2,400 mark in mid-session in the New York market. And silver prices, after breaking above the $28/oz mark – a three-year high – were trading just below that mark. One ounce is equal to 31.1gm.
The high prices of the yellow metal have resulted in a near-total stagnancy in jewellery demand in the first quarter in both rural and urban centres according to feedback from jewellery retailers, said Sachin Jain, regional CEO, India, World Gold Council. Also, during the ensuing general election period extending to two months, there will be heightened scrutiny on the movement of gold and cash, which in turn would weigh on the precious metals’ demand, Jain said. “On the flip side, higher prices could encourage investment into gold-linked digital and investment products.”
Several global and domestic factors have combined to take gold and silver prices to record high levels, analysts and industry watchers said.
Among other reasons, the ongoing buying of gold by global central banks has provided significant support to its price, along with sustained geopolitical tensions and the anticipation of imminent interest rate reversals in the US, said Jateen Trivedi of LKP Securities. “While the overall price outlook remains bullish, some correction may be expected towards 69,500 during the course of this week,” Trivedi said.
Latest data showed that the Chinese central bank, to diversify its holdings of foreign assets, has bought gold for 16 consecutive months. Back home, in Jan, RBI bought 8,700 kg of gold – its biggest monthly purchase in about 18 months – data from WGC showed. The recent escalation of geopolitical tensions in West Asia has also been a factor in driving the prices of precious metals up, analysts said. Precious metals, especially gold, are hedges against uncertain economic situations and that’s leading to higher demand for these metals.
Another reason for the rise in gold prices is the recent weakness of the rupee against the dollar, analysts said. The rupee touched the 83.45-per-dollar mark last week. As India is a net gold importer by a huge margin, any weakness of the rupee adds up to the gold’s price in the domestic market.
Gold prices on Monday jumped by over Rs 1,500 to record Rs 71,100/10gm crossing the Rs 70,000-milestone for the first time amid heightened geopolitical risks and aggressive buying by central banks. Silver, too, joined the party, crossing the Rs 80,000/kg-level for the first time as prices jumped by Rs 2,000 to Rs 81,200/kg. High gold prices have, however, dampened jewellers’ business as sales are down more than 50% from the year-ago period, jewellers said.
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In global markets, gold prices went past the $2,300/ounce mark recently and were nearing the $2,400 mark in mid-session in the New York market. And silver prices, after breaking above the $28/oz mark – a three-year high – were trading just below that mark. One ounce is equal to 31.1gm.
The high prices of the yellow metal have resulted in a near-total stagnancy in jewellery demand in the first quarter in both rural and urban centres according to feedback from jewellery retailers, said Sachin Jain, regional CEO, India, World Gold Council. Also, during the ensuing general election period extending to two months, there will be heightened scrutiny on the movement of gold and cash, which in turn would weigh on the precious metals’ demand, Jain said. “On the flip side, higher prices could encourage investment into gold-linked digital and investment products.”
Several global and domestic factors have combined to take gold and silver prices to record high levels, analysts and industry watchers said.
Among other reasons, the ongoing buying of gold by global central banks has provided significant support to its price, along with sustained geopolitical tensions and the anticipation of imminent interest rate reversals in the US, said Jateen Trivedi of LKP Securities. “While the overall price outlook remains bullish, some correction may be expected towards 69,500 during the course of this week,” Trivedi said.
Latest data showed that the Chinese central bank, to diversify its holdings of foreign assets, has bought gold for 16 consecutive months. Back home, in Jan, RBI bought 8,700 kg of gold – its biggest monthly purchase in about 18 months – data from WGC showed. The recent escalation of geopolitical tensions in West Asia has also been a factor in driving the prices of precious metals up, analysts said. Precious metals, especially gold, are hedges against uncertain economic situations and that’s leading to higher demand for these metals.
Expand
Another reason for the rise in gold prices is the recent weakness of the rupee against the dollar, analysts said. The rupee touched the 83.45-per-dollar mark last week. As India is a net gold importer by a huge margin, any weakness of the rupee adds up to the gold’s price in the domestic market.