Gold prices remained stable on Dhanteras even as demand soared

by IANS |

New Delhi, Nov 3 (IANS) Prices of gold remained stable on the auspicious occasion of Dhanteras even as sales of the precious metal is estimated to have risen by over 15 per cent above the pre-pandemic level of 2019.

As per the India Bullion and Jewellers Association (IBJA), gold sales on Dhanteras across the country this year was about 50 tonnes, valued at over Rs 20,000 crore, whereas it was Rs 12,000 crore in 2019.

The IBJA's data showed that the average price of gold of 24-carat purity (999 purity) was over Rs 49,000 per 10 grams (with GST) which was lower than last year's price of around Rs 55,000 per 10 grams (with GST).

"Gold prices did not rise this year due to the commencement of the vaccination process and the growth of the global economy,".

"Fear due to the coronavirus pandemic has subsided and industrial activity has risen therefore safe haven demand for gold has faded."

According to Navneet Damani, VP - Commodity Research, Motilal Oswal Financial Services: "Gold price has been consolidating in a tight range since last Diwali, though the choppiness increased in the last couple of months amidst volatility in dollar and bond yields."

"Last year, gold prices performed well as the impact of pandemic and other uncertainties gave a boost to the overall precious metal pack; although since the start of 2021, developments in vaccine, optimism regarding the global growth; geo-political uncertainties being in the sidelines, rise in US dollar and yields, outflow in 'SPDR' holdings, have capped the gains for the bullion."

Amidst all these factors, Damani said that riskier assets like equities have received a healthy boost whose impact was also seen on the safe haven assets.

In addition, Tapan Patel, Senior Analyst, Commodities for HDFC Securities, cited that gold prices have given negative returns in India till now for the year 2021 losing more than 5 per cent compared to the broad rally in the year 2019 and 2020 with 13 per cent and 26 per cent returns respectively.

"Gold prices have traded under pressure since January 2021 as the reopening of global economic activate and large-scale vaccination improved investment sentiment in riskier assets."

"The economic growth optimism with ease of Covid-19 restrictions and major central banks' policy shift boosted buying in dollars which is trading around 5 per cent up for the year from December 2020 closing levels."

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