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Supply of Old Gold Spurts as Price of Metal Goes Up

Supply of Old Gold Spurts as Price of Metal Goes Up

Tue Sep 12 2017

 

Indian households seek to cash in on opportunity; farmers affected by floods sell gold to recover losses & take up planting

A rally in gold prices over the past week has led to a spurt in Indian households seeking to cash in on the opportunity.

 

The supply of old gold has gone up a fifth, according to bullion dealers and jewellers, while the demand for gold at the prevailing price of about `. 30,200 per 10 gm has fallen sharply. As a result, gold is available at a discount of $5 per troy ounce in the local market, they said.

 

“The arrival of old gold or scrap gold has increased 20% in the last one week. As a result, refining activities have picked up as well,“ said James Jose, secretary, Association of Gold Refineries and Mints. It is estimated that nearly 22,000 tons of idle gold is locked up in Indian households.

 

According to jewellers from rural areas, farmers affected by floods are also selling old gold to recover their losses and take up new planting. “There has been a good flow of old gold in the market from drought affected parts of southern India,“ a trader said on condition of anonymity. However, analysts are not sure whether the rally in gold prices will continue for long.

 

Sekhar Bhandari, executive vice president, global banking at Kotak Mahindra Bank said, “Prices of gold had gone up because of geopolitical tension over possibility of North Korea launching more missiles. There fore, at this point it is difficult to predict whether prices will further go up and the rally will continue. However, rising prices have dented the demand in the market to some extent. Typically, in such a scena rio consumers prefer to wait and watch.“ According to some analysts, the price hike in yellow metal has not sparked interest from investors as the equity market is giving good returns to them. In the second quarter of 2017, investment demand for gold grew 26% over the year-ago figure.

 

Mukesh Kothari, director, RiddiSiddhi Bullion said that demand is likely to pick up after Dussehra.“There may be a correction in prices as well during that time,“ he said. Gold prices have risen more than 9% since the beginning of 2017.

 

Source: Economictimes.Indiatimes.com