The Hindu Business Line : Gold prices maintain upswing

Mumbai, Jan. 9 For the safe haven metal there is no turning back as yet, for it has already broken its last high of $850 an ounce set in 1980 thrice this year to reach the new all-time high of $887.85/oz.

Tracking this international movement, the price for gold was stated at Rs 11,330 per 10 gm, the highest recorded in the country. Although the fundamental factors pushing gold prices up remain the same, launch of gold futures contracts at Shanghai Futures Exchange for the first time on Wednesday is believed to push up prices, according to analysts.

Slow movements

However, while the international prices are going up by leaps and bounds, prices in India are only scaling up in inches. The reason for this is that the rupee has appreciated by 0.45 per cent during price surge in gold since January 2.

Since then (January 2), while dollar price of gold has moved up by 5.60 per cent from $840.75/oz to $887.85, price in Indian rupees have gone up only by 4.48 per cent from Rs 10,815/10 grams to Rs 11,300. And even so, with the appreciating rupee that is keeping the Indian gold price from going through the roof like in the overseas market, disparity in the market price and banks’ landed cost of imported gold has been widening.

Banks’ landed cost of gold on Wednesday was Rs 11,358-11,375/10 gm.

Disparity in the market price of gold and banks’ cost is a function of poor demand and high prices, said a bank official.

Discount ruling

There is a huge discount ruling in the market right now from the banks’ cost, though there is no straightjacket formula to calculate it, said a bank official.

Standard gold is at a discount of 2 per cent in the market as supply is being met from scrap sales, which does not carry premium as imported gold, said Mr Suresh Hundia, President of Bombay Bullion Association.