The overall demand for gold in India has seen a sharp decline in the last two months, with gold buying by consumers decreasing by as much as 60% in the retail segment.
Gold prices fell by Rs 170 per 10 grams in the bullion market on Friday following a drop in gold prices globally. However, lower gold prices have not boosted gold sales. The overall demand for gold in India has seen a sharp decline in the last two months, with gold buying by consumers decreasing by as much as 60% in the retail segment. Surendra Mehta of the India Bullion and Jewellers Association (IBJA) points out two reasons why a discount of 2% is being offered on the precious metal.
A discount of almost Rs 40-50 is currently being offered on gold prices in the Indian market, he said. “Gold prices have dropped by about $62 in the last 12 trading sessions, which is a huge drop as far as the gold prices are concerned. That is one of the reason that there has been a discount in the market,” Mehta said in an interview to CNBC TV18.
Adding to that, Mehta said: “The CFTC (Commodity Futures Trading Commission) report from the US says that last week, the hedge funds and other speculative traders have cut their bullish bets by 11% and have grown their bearish bets by about 60%. These kind of data are not at all good for the market and it is going to increase the discount.”
Mehta said that gold buying decline has been almost 40-60% in some of the retail segments and about 30-35% in the wholesale segment. “This is something unusual happening. It looks like the market may not revive in the near future unless the rupee settles,” said Mehta.
While gold demand remains muted, gold prices fell by Rs 170 to Rs 31,480 per 10 grams in the bullion market on Friday as the rupee recovered from its record intraday low of 69.10 on Thursday to 68.36 today, reported PTI. Following the trend were silver prices, which lost another Rs 200 to Rs 40,600 per kg owing to lower demand from industrial units and coin makers. In Delhi, gold prices of 99.9% and 99.5% purity softened by Rs 170 each to Rs 31,480 and Rs 31,330 per 10 grams, respectively.