Kolkata: The rupee appreciation on Monday brought cheer to the gold trade which was nervous about the impact of the Reserve Bank of India’s board meeting on the market and currency since morning. A strong rupee against the dollarNSE -1.74 % brings gold prices down and spurs consumption in the country whose annual offtake is around 800-850 tonnes.
At 3.30 pm, the rupee was quoted at 71.61, up 32 paise against the dollar at the interbank foreign exchange. In early trade, fresh demand for the American currency from importers amid rise in crude prices weighed on the domestic unit. However, weakness in the US dollar against some currencies in the global market and a higher opening of the domestic equity market helped the rupee to move ahead, marketmen said.
Talking to ET, Surendra Mehta, national secretary, India Bullion & Jewellers (IBJA), said, “If the central bank takes a decision to infuse fresh capital, then there will be pressure on the rupee. Gold, in that case, will take a back seat.”
The trade wants the rupee to stabilise at 71 against the dollar so that the price can come down by 3.22 per cent to touch Rs 30,000 per 10 gm. “This will result in movement of the metal,” Mehta said. On Monday, gold was trading at Rs 31,115 per 10 gm in Mumbai’s Zaveri Bazar.
Gold has not done well during the just-concluded Dhanteras-Diwali period, when the trade expects Indians to spend on the precious metal. This year the demand remained flat with light-weight jewellery hogging the limelight.
Incidentally, the discount on gold at the B2B level has disappeared and on Monday it was selling at a premium of $1 per ounce. “The demand is not huge, but it is steady,” said Mukesh Kothari, director, RiddiSiddhi Bullions.
Though the trade is hopeful that the price of gold will cool off in the coming weeks because of the rupee getting stronger, analysts such as Gnanasekar Thiagarajan, director, Commtrendz Research, said that rupee appreciation will be limited. “Market cannot expect that dollar will suddenly become weak as there is no such trigger. The excepted December rate hike by the Federal Reserve has already been factored in.”
In international markets, gold prices edged lower as investors booked some profit after the metal rose for four consecutive sessions last week, though the prices were supported by a muted dollar on the Federal Reserve’s concerns over the global economy.
Spot gold was down 0.1 per cent at $1,219.98 per ounce. US gold futures were down 0.3 per cent at $1,219.6 per ounce.
Source: economictimes.indiatimes.com