Gold prices have been on a downtrend in the past few weeks; and the volatility is likely to continue as the market’s knee-jerk reaction to last week’s news of the US Fed tapering has exacerbated the weakness, bullion experts said.
On Monday, the yellow metal closed at Rs29,990/10gm in the Mumbai bullion market, down nearly 1.5% in the last one week. This month alone so far, gold has shed Rs750/10gm or 2.6%.
Naveen Mathur, associate director - commodities and currency, Angel Broking, said, “We don’t expect prices to fall below Rs25,000-26000/10gm level; but don’t even expect them to rise above Rs30,000/10gm levels. Prices will continue to remain around these levels and will remain volatile.”
There does not seem to be any major upside trigger; so, he said, it is likely that prices will continue to remain under pressure. The fact that the rupee has also been on a firm footing will ensure that gold prices do not inch up like they did in July-August.
Prithviraj Kothari, chairman of RiddiSiddhi Bullions, said that demand has also been very tepid, intensifying the pressure on prices. “Since there is no investment demand, prices have been rather soft.”
Experts said that since developed markets have started showing signs of recovery, investors are looking to park their money in other assets – gold is beginning to lose its safe-haven charm.
From its peak of Rs33,265/10gm in August, gold has shed 10%. The year so far was marked with extreme volatility with gold touching a low of Rs25,130/10gm in June and then rising to Rs33,265/10gm in less than two months.
RBI for review of curbs on gold imports
Meanwhile, the Reserve Bank of India (RBI) has suggested a review of the restrictions on gold imports in informal discussions with the finance ministry, a source close to the development told Cogencis. “There has been no formal letter or discussion for a reversal of the curbs or duties but the RBI’s officials have raised the issue and sought a review.”
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