Gold prices across India’s key spot markets opened lower on Friday (October 21) ahead of Dhanteras, tracking weakness in the global markets. Even though a robust physical demand is seen ahead of the auspicious occasion of Dhanteras, gold prices have largely been muted due to global factors, analysts said.
Dhanteras is considered to be the most auspicious day for buying new items ranging from gold jewellery to utensils. It is going to be celebrated on Sunday this year.
The opening price for 999 purity gold on Friday was Rs 49,855 per 10 grams, down Rs 373 from Thursday’s closing price of Rs 50,228, while that of 995 purity gold was Rs 49,655, down Rs 372 from Rs 50,027 on Thursday, the data available on India Bullion and Jewellers Association’s (IBJA) website showed.
Likewise, the price for gold of 916 purity was Rs 45,667, down Rs 342 from Rs 46,009 and that of 750 purity gold was Rs 37,391, down Rs 280 from Rs 37,671. The 585 purity gold was available at Rs 29,165, down Rs 218 from Rs 29,383, the data showed.
Gold futures on the Multi Commodity Exchange of India (MCX) too were trading lower on Friday, in line with the global prices which declined following elevated US Treasury yields and dollar amid a growing chorus of hawkish comments from Federal Reserve officials.
At 2:20 pm, the gold contract for December delivery was trading at Rs 49,843.00 per 10 grams, down Rs 300.00 or 0.6 per cent from Thursday’s close of Rs 50,143.00. The volumes stood at 4,438 lots while the open interest (OI) was at 12,871 lots, data from MCX showed.
According to data by Reuters, spot gold fell 0.2 per cent to $1,624.90 per ounce, as of 0739 GMT, after hitting its lowest level since September 28. US gold futures lost 0.4 per cent to $1,630.10.
Speaking on the gold demand, Navneet Damani, Senior VP – Commodity Research at Motilal Oswal Financial Services said, “Demand trend for gold has been pretty robust with imports rising in the past few months. Even after a 5 per cent import duty hike we haven’t seen a slowdown or demand rollback in the last few months…with regards to Dhanteras, market estimates anywhere between 35-40 tonnes could be sold during Dhanteras.”
On the futures, Damani said that COMEX gold is seen holding near the $1,605-1,610 per ounce range over the next few days and could probably see a bounceback. For the Muhurat trading session, he said that Rs 49,800-50,000 per 10 grams could be a good level to buy from a medium-term perspective. He anticipates gold futures reaching Rs 53,500 mark in the next 12 months.
Echoing similar sentiments, Surendra Mehta, national secretary at IBJA said that he sees extremely positive demand on Dhanteras as there’s a huge rush in the gold market this year.
“It seems that there is fear in people’s mind that “I will be left without Gold”. The uncertainty hovering around world economy, likely recession, strengthening of dollar index due to collapse of various world currency, geopolitical tension are the main reason as to why there is rush to buy gold. The Gold hovering near Rs 50,000/- is adding fuel to fire to buy gold, as Indians feel that it is now a base price of gold,” Mehta said.
“We have observed that there is a huge rush to buy gold not only in western India but also in north India. Needless to say, in the south gold sales are like hotcakes every year during Diwali. The good monsoon has enabled good sales in rural India also. We have observed that this year not only lightweight jewellery is sold but there is heavy demand for bridal jewellery probably due to highest number of weddings ahead of Diwali,” he added.
Ajay Kedia, founder and director at Kedia Advisory told indianexpress.com that gold demand on Dhanteras is likely to be robust as after two years of Covid-19 restrictions, this year has been largely restriction free and more people are likely to shop this year. There has also been a surge in the number of weddings this year and the jewellery demand has been higher.
While he feels that there can be some volatility in the global market in the near term arising from the outcome of the US Federal Reserve’s meeting early next month where it may hike its interest rate, locally the precious metal is likely to sail through on festive and marriage buying.
“A weak rupee is also likely to support gold prices…for Muhurat trading, the global factor is likely to play a factor and market may move sideways to negative, however in a years time gold can spike up to Rs 56,000 levels,” Kedia said.
