Surging prices temper India gold buyers’ demand
MUMBAI: Gold buyers in India, the biggest market after China, may give jewellery stores a miss in the run-up to the Deepavali festival because of a surge in domestic prices to the highest level in more than two years.
Bullion had climbed in local markets because of a weak rupee, and rising prices just before the celebrations of Deepavali and Dhanteras weren’t good for demand, said Chirag Sheth, an analyst at Metals Focus Ltd, here.
Plus, “overseas spot gold has, in the last two or three days, shown the first signs of breakout”, he said. “If this trend continues, then it’s going to be a dampener.”
The most auspicious day of the year to buy gold is Dhanteras, which falls on November 5, two days before Deepavali.
Wearing or gifting of jewellery is thought to bring good fortune during celebrations and weddings. The last quarter of the year was the season of peak demand, with Indians buying almost 240 tonnes on average in the past four years, according to the World Gold Council.
Gold futures on the Multi Commodity Exchange of India Ltd have climbed nine per cent this year to the highest since July 2016, while overseas gold has dropped six per cent.
Analysts expect the rupee to extend its worst run of losses in 16 years. The South Asian nation imports almost all the gold it consumes.