Amid nil imports over the past two months and low scrap inflows in the local markets, physical trading in bullion has virtually come to a halt since beginning of the year, if bullion traders in Mumbai are to be believed.
Local trading volume in gold and silver in the physical market remained low at 20-30 kg per day compared to nearly 250-300 kg last year, trade sources said.
The country did not import any yellow metal for the second consecutive month in March 2009. Imports in February and March last year were 23 tonne and 21 tonne, respectively. On the other hand, inflows of recycled gold from local refineries have also reduced to average 25-30 kg per day from 150-200 kg last year, sources said.
?Overhead costs are eating into the already depressed margins of bullion dealers forcing some of them to sell stocks at a loss to meet operating expenses. Even after gold prices rose 22% in three months from Rs 12,500 around the beginning of December to Rs 16,040 per 10 gm more recently, demand for gold jewellery has crashed,? Samir Shah, vice president (business development), Riddhi Siddhi Bullion Ltd said.
?Most jewellers are sitting on stocks of old jewellery sold by families cashing in on the sharp rise in the gold price. Recycled gold from this jewellery is enough to meet any fresh demand,? he said.
?Investors continue to book profits in gold in anticipation of limited upside due to weak demand for jewellery amid the economic downturn,? Debjyoti Chatterjee of ADMISI Commodities said.
For 2008, gold had performed the best with a gain of 4.32%, followed by silver with a loss of 26.90%, with platinum in last place with a loss of 41.31%.