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All-round selling emerged in the bullion market as gold prices hit a record Rs 30,000 for 10 gm in Mumbai on Saturday.
“There is no demand for gold. People are selling scrap gold or booking profits on their investments. Some are even exchanging old jewellery for new,” said Mr Prithviraj Kothari, President of the Bombay Bullion Association.
“The country has never seen gold at such high levels.” The price of gold (of 99.9 per cent purity) increased by Rs 905 to Rs 30,030 (for 10 gm) on global cues. The yellow metal jumped by 4 per cent Friday, its biggest gain in three years, in London and New York.
Weak data helping gold
Gold used in making ornaments (of 99.5 per cent purity) increased by Rs 890 to Rs 29,895. Silver increased by Rs 1,090 to Rs 54,750 a kg.
“Gold has gained because bearishness prevails in stocks and other commodities. Weak US employment data, the Euro Zone crisis and a drop in Chinese industrial production could drive investors to gold,” said Mr Jayantilal J. Chalani, President of the Madras Jewellers and Diamond Association.
At the global market, gold climbed 4 per cent to $1,629.41 a troy ounce before settling at $1,621. It is still off its record high of $1,889.70 seen in August last year.
“Rupee depreciation is the key reason why gold prices have touched record levels, ,” said Mr Kothari.
The rupee has dropped to 55.61 against the dollar from 50.70 at the beginning of this fiscal.
Going forward, “demand could be lukewarm, since there are only two auspicious days in the month when marriages (which typically drive gold jewellery consumption in India) can be held,” said Mr Kothari. However, “we could still see demand in the South,” Mr Chalani said.
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