New Delhi, March 11: There is good news for gold lovers. The price of the yellow metal, which has corrected by nearly Rs 15,000 per 10 gm in the last two months, may fall by a further Rs 500 to Rs 1,000.
The price of gold in November, 2009 was at a historic high of Rs 18,000 per 10 gm. On Wednesday, it was trading at Rs 16,780 per 10 gm.
Hasmukh Bafna, president of the Gold Chains & Jewellery Wholesalers Welfare Association, said there are many reason for the consistent drop in the price of gold. “ Firstly the demand from retail consumers and jewellery manufacturers has come down. With the prices touching historic highs people were more interested in selling old gold scraps to make a neat profit,” he said.
Another reason for the fall is that the International Monetary Fund ( IMF) has been selling huge quantities of gold in the retail market, Bafna said. “ India and China are the largest buyers of gold. Suddenly China has decided not to buy gold as a result of which IMF has no option but to sell the 200 tonnes of gold surplus in the retail markets, which has led a huge fall in the prices,” he said.
Suresh Hundia, president of the Bombay Bullion Association said that though the prices of gold have dropped, demand for the yellow metal is yet to pick up. “ This is the year end and everybody is liquidating their position. So I don’t see any rising curve as far as demand is concerned,” he said. Echoing Arora’s sentiments Bafna added that consumers’ buying capacity has diminished. “ There is pure speculation in the markets now. Genuine buyers are out and this has added to the volatile prices. The prices of gold may drop further,” he said.
According to Halifax Research, the price of gold has witnessed 277 per cent hike in the past 10 years, with investors attracted to gold during the recession as they sought a safe haven from inflation.
Both Bafna and Arora advise consumers to wait for a while as gold is still expensive at these levels. “ There would be further correction and gold would correct between Rs 15,800 to Rs 14,300 levels between March- June. Due to heavy speculation, gold prices may touch historic levels of Rs 20,000 by October,” he said.
–Agencies