Bullion dealers and analysts are divided over which way gold prices are headed even as the wedding season is due to begin midApril. While some feel that gold price may drop by more than 3% to Rs 27,800 per 10 gm in the short term if rupee continues to remain strong against the dollar, others feel it may firm up in the coming weeks.
Gold prices had slipped in the run-up to US’ Federal Open Market Committee (FOMC) meeting in the middle of last week but subsequently recovered on Friday. Since rupee has strengthened against the dollar, the impact of the price rise has not been felt significantly in rupee terms.
“If rupee continues to strengthen further, then prices may drop to Rs 27,800 per 10 gm giving an opportunity to domestic consumers to buy gold ahead of the wedding season,“ said Prithviraj Kothari, managing director, RiddiSiddhi Bullion (RSBL).
Kothari said gold and other precious metals could lose appeal for investors but the safe haven appeal would continue as global uncertainties continue to tick on the radar. On Thursday, spot price of gold in Mumbai’s Zaveri Bazar was hovering around Rs 28,710 per 10 gm. The RSBL chief indicated that if prices move up then it will touch Rs 29,000 per 10 gm.
Surendra Mehta, national secretary, India Bullion & Jewellers Association, said: “We are hearing that the Modi government is trying to re-rate the rupee. We have to see what will be the impact on gold. In last one month, there has been substantial appreciation in rupee and if this continues then gold prices may go down to Rs 28,000 levels. However, we continue to remain bullish on gold prices in the international market.”
Shekhar Bhandari, business head for global transaction (banking and precious metals), Kotak Mahindra BankBSE -0.08 %, said there is no indicator that gold prices will slip from the current level. “Rupee doesn’t look to have a further upside from the current level. Gold prices are likely to move up in coming weeks.” The movement of gold is critical over the next six weeks when Akshay Tritiya will take place. Nitin Khandelwal, chairman, All India Gems & Jewellery Trade Federation, said: “Demand has been good over last few days as prices had dropped.”