The Hindu Business Line : Gold slips in forward market on rupee's gains

Indicators
Prices were down by 3.45 per cent to Rs 9,098 on MCX during January 31 and April 26 against 3.04 per cent rise at Comex during the same period
Jewellers riding high on good business from lesser known religious festivals

Kolkata. May 12

The appreciation of rupee has made gold cheaper in domestic forward markets vis-a-vis the rise in prices in the global market between February and April. It is, however, doubtful whether the end customers have got the full benefit of the same as demand for jewelleries has been exceptionally high in the local market during this period.

Study's findings

According to a study conducted by Comtrendz Research, gold prices have come down by 3.45 per cent to Rs 9,098 on MCX between January 31 and April 26. This is against a 3.04 per cent rise in prices on Comex during the same period. Comtrendz has considered the most active contracts for this comparative analysis.

The reason is a clear 7.22 per cent appreciation of the rupee from Rs 44.07 a dollar to Rs 40.89 during the period.

"The appreciation of rupee has clearly spoilt the party on gold in India for the time being," feels Mr Si Kannan, Associate Vice-president of Kotak CSL Research.

No more rise?

According to him, every 10 paise appreciation of rupee negates one-dollar upward movement in world gold prices.

He is, however, hopeful that no major appreciation of rupee is expected any longer.

But have the customers enjoyed the full benefit of the same? Market sources feel that a strong demand push has worked against the customers. Jewellery prices have a strong correlation with demand factor.

Mr Devasis Moitra, head of the West and Northern region of the World Gold Council, India chapter, does not have any ready figures of retail jewellery prices during March-April.

Good business

He, however, claimed that the jewellers had made unexpectedly good business till date taking a ride on TV soaps promoting the buying of gold on the occasion of lesser known regional festivals such as "Akshaya Tritya", "Baisakhi", and "Guru Pushya Nakshtra" during the first four months of the year.

"Generally, 30-35 per cent of the total demand for gold is generated in the first half of the year. Last year, it was even worse when sales were hardly 25 per cent due to volatility in gold prices. But this year the market may have already consumed 45 per cent of the total consumption in a mere four-and-a-half months," Mr Moitra said.

In fact, 55 to 60 tonnes of gold jewellery were sold on Akshaya Tritya on April 19 and 20.