Gold buying on the auspicious Akshaya Tritiya day was muted. Yet, prices in Mumbai soared by Rs 250 to Rs 28,885 per 10 grams on Tuesday.

Mr Prithviraj Kothari, President, Bombay Bullion Association, said that the physical buying has halved this year to 10 tonnes on Tuesday from 20 tonnes last year.

“Global prices, import duty hike and weaker rupee have contributed to the rising prices. Generally, prices remain high during such festivals,” he added.

According to him, the yellow metal in the jewellery form is losing its place as a demand driver with investors now switching to exchange traded funds (ETFs).

In the spot trade, standard gold (purity of 99.5) prices opened at Rs 28,820, per 10 grams and ended at Rs 28,885. On the other hand, pure gold (purity of 99.9) price opened at Rs 28,950 per 10 grams and ended higher at Rs 29,025.

Retailers maintain that they still see a strong demand despite the price rise. Mr Mehul Choksi, Chairman and Managing Director, Gitanjali Group, said, “despite the jewellers' strike, we witnessed a strong demand with 35 per cent growth and more than 20 per cent increase in volume terms.”

Mr. Naveen Mathur, Associate Director (Commodities and Currencies), Angel Broking, said the US Federal Reserve's approach towards monetary policy has been a crucial factor behind the fluctuation of gold prices in recent months. If the Fed gives any hint on monetary easing at the next meeting gold prices may go up.

(This article was published on April 24, 2012)
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