With gold prices moving up to about Rs 31,500 per 10 gm in the spot market, bullion traders and analysts said the Rs 32,000 per 10 gm mark may well be breached by Diwali.
“The US economic data released last Friday gives an indication that US Federal Reserve may not raise interest rates at its September policy meeting,” said Ketan Shroff, director, Penta Gold Bullion. “The US non-manufacturing new order index for August fell to the lowest since December 2013. And even if Fed hikes rate it will have very little impact on gold. Prices will definitely go up.”Sreedhar GV, chairman of All India Gems & Jewellery Trade Federation, said that gold is in a bullish phase now and may touch Rs 32,000 per 10 gm by Diwali, which falls on October 29. Demand all over India in Sept is up 30% compared to that a year ago, he said. Analysts said that even if there is a rate hike, things can work in favour of gold with the depreciation in the rupee as the demand for dollar would rise in the event of a rate hike and would subsequently increase the landed price of gold.
India is expected to import 750-850 tonnes of gold this year. From a technical perspective, analysts said spot gold prices in the international markets can go higher towards $1,390 per troy ounce while MCX gold price can move towards Rs 32,200 per 10 gm by early October. On Wednesday, the October contract on MCX was trading at Rs 31,390 per 10 gm in the afternoon after it corrected from the opening high of Rs 31,466 per 10 gm.
The price sensitive eastern India market has also reacted to the gold demand. Suvankar Sen, managing director of Senco Gold & Diamonds, said, “We have seen demand picking up at our stores. Mostly people are buying for wedding purpose. Interestingly, consumers have a feeling that gold prices will not fall below Rs 30,000 per 10 gm level in near term. So they are making purchases as there is talk that price of gold may shot up.” Retailers said demand is also coming in from government employees who have gained from the seventh pay commission award.
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