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Festive shine on gold

Mumbai/Calcutta, Nov. 6: Gold prices surged a day before Dhanteras — an occasion when a lot of Indians buy at least a small trinket — with little or no sign that the 19 per cent rise in prices over the past 12 months will deter buyers.

In Calcutta, the West Bengal Bullion Merchants & Jewellers Association (WBBMJA) quoted a price of Rs 10,570 per 10gm (excluding value-added tax), a rise of Rs 160 from yesterday’s closing price of Rs 10,410 per 10gm. Guinea gold (22 carat) was traded at Rs 9,980 per 10 gram.

In Mumbai, the prices were a tad lower at Rs 10,410 per 10gm, which was Rs 180 higher than yesterday’s close.

The surge in domestic gold prices has been underpinned by the buoyant world prices and robust imports. On Tuesday, world gold prices peaked at a 28-year high of $822.96 a troy ounce, reflecting a gain of more than 290 per cent since the sub-prime crisis hit the US mortgage markets in August.

Gold prices in India haven’t risen as sharply as in the world markets, largely because the rupee has climbed 12 per cent since April. “I expect gold to cross the Rs-11,000-mark by the end of November,” said Tarang Bhanushali, a commodities analyst with Indiainfoline.

Very few players in the market are as bullish as Bhansali: in fact, the August 2008 gold futures contract traded today on the Multi-Commodity Exchange at Rs 10,650 per 10gm — the highest among all the futures contracts being traded. It tapers off to Rs 10,556 in the October 2008 contract.

Brokers, traders and analysts may not agree on the prospective price for the yellow metal but they all admit that there could be a slackening of sales this season.

“There might be a slight decrease in the volumes; if I bought 20gm last year, I will only buy 15gm this year, but investment in gold will not go down,” said Sanjeev Aggarwal, MD of Revah Corporation.

“The buying fervour during Dhanteras isn’t as strong in the east as it is in Gujarat or UP. But we still aren’t seeing the kind of demand that was witnessed last year,” said an official with WBBMJA.

“Retail buyers are postponing their gold and jewellery purchases for the ensuing marriage season,” said a salesman at Anjali Jewellers.

“Rising gold prices will have some impact on our sales. Either the buyer will postpone purchases or buy a smaller quantity of gold,” said V. Govind Raj, VP (retail and marketing) at Tanishq.

Gold imports in the first six months of 2007 have totalled 504 tonnes. In 2006, it was 715 tonnes. “We expect to cross 715 tonnes by September. So, the rise in prices has not affected imports,” said Keyur Shah, associate director, World Gold Council.

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