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Jewellers, traders stock gold ahead of election results

Jewellers, traders stock gold ahead of election results

Thu May 23 2019

 

Jewellers stocked gold ahead of the general election results as prices of the precious metal continued to fall owing to strengthening of the rupee amid expectations that the BJP-led NDA government would return to power. Bullion dealers said there was demand from investors as well, at a price of Rs 31,600 per 10 gm, in anticipation of an increase in prices in the international market in the second half of 2019.

 

“Post exit polls, we are seeing some movement in the market,” said Mukesh Kothari, director, RiddiSiddhi Bullions. “Jewellers are stocking gold as the price level is comfortable and there is no premium on gold. Also, we are seeing investors taking interest in gold.”

jewellery-graph

 

Bullion dealers said they were stocking gold as prices had fallen despite exit polls predicting a sweeping victory for the NDA.

 

“Price of gold is a function of the US dollar and Indian rupee. If there is a stable government at the Centre with a clear policy, then rupee is going to appreciate against the dollar,” said Shekhar Bhandari, business head, global transaction services at Kotak Mahindra Bank. “In that case, gold price may further fall in the domestic market, provided international prices do not shoot up.”

 

The rupee strengthened against the US dollar for the third consecutive session on Wednesday after the release of the exit poll results on Sunday.

 

Internationally, gold prices dropped on Tuesday to the lowest in more than two weeks, as the dollar strengthened along with equities and other riskier assets ahead of the US Fed’s release of minutes. Spot gold fell 0.3 per cent to $1,273.70 per ounce. The session’s intraday low of $1,268.97 was its lowest since May 3. US gold futures settled down 0.3 per cent at $1,273.20.

 

Analysts said economic uncertainty might increase purchase of gold by central banks, in line with the trend seen in China and Russia which increased gold buying since 2018 with a spurt in trade disputes. Gold and dollar may attract safe haven buying if the situation worsens.

 

Source: https://economictimes.indiatimes.com/