This Diwali has provided a dhamaka opportunity for Indian gold traders to book profits. On an investment of Rs 9,000 crore, punters have made a cool Rs 1,500 crore?that?s a return of 16% in just one month. These profits have been possible thanks to the sudden spurt in the price of gold. The gold rally has seen the yellow metal hit 28-year peaks for the past four weeks.
?Gold is like a medicine. The more people are worried about the global financial system, the more money flows into it, thereby opening up new upsides in the months ahead. Quite conveniently crossing the psychological mark of $800 an ounce, we now see the potential of gold prices moving up to $900 by next year, most likely by March 2008,? said Si Kannan, associate VP, Kotak Commodity Services Ltd.
It?s little wonder that jewellers in Mumbai?s Zaveri Bazaar have hedged to the limit. However, gold?s bull run has coincided with a very dull off-take in domestic jewellery markets. Indeed, higher prices appear to have dimmed the attraction of gold among the middle-class this festive season.
Confirming the trend, Satish Bansal of MD Overseas, one of India?s largest gold importers, said, ?It is investors who have profited by this rise in gold prices. Those who bought gold at, say, Rs 8,800 and kept open positions would benefit at current prices. But the physical demand this season in India has been very dull and jewellers have not had the usual transactions.?
The trend is a first of sorts for India, highlighting the metamorphosis of gold in Indian markets from a precious metal bought for ornaments into a traded commodity, just as in the rest of the world. The total volume of gold traded in October on the MCX, which accounts for over 90% of gold traded in India, was 1,053.64 tonne at a value of Rs 95,850.15 crore.