Financial Daily from THE HINDU group of publications
Friday, May 24, 2002
Agri-Biz & Commodities
Firm trend seen in bullion
MUMBAI, May 23
THE bullion market appears to be on a firm trend, despite today's downward correction in the prices of precious metals, dealers and analysts said.
After a recent flare-up in prices, both gold and silver edged down primarily because of buyers' resistance to high prices.
Gold (24 carat) ended today at Rs 5,270 per 10 gms, below previous close of Rs 5,290. Gold 10-tola bar also edged down to Rs 61,700 from the previous close of Rs 62,000.
Silver (.999 fineness) also moved down to Rs 8,170 per kg from the previous close of Rs 8,240.
However, despite today's dip in prices, the trend is upward, bullion dealers believe.
The recent flare-up in gold prices on the international market was on account of a number of factors -- fears of war between India and Pakistan, violence in West Asia and a warning by the US of another terror attack.
International gold prices moved to a high of two and a half years hitting $ 319.60 an ounce primarily on hectic buying. However, gold prices on the London Metal Exchange opened slightly weak in today's early trade.
According to dealers, gold has once again emerged as a safe haven in the backdrop of war fears on the India-Pakistan border and other concerns around the world.
The weakening of the dollar against most other currencies also made gold attractive for buying. In India, the rupee fell to a new low of 49.0550/0650 in today's trade after staying firm for the past two sessions.
According to dealers, any further rise in gold price would result in selling pressure. Purchases have already fallen and have been replaced by sales, dealers said. ''At these prices, there is resistance from buyers. Besides, there is no parity for imports,'' a dealer said.
According to the World Gold Council, Indian gold demand is largely price sensitive.
This was evident in the first quarter of 2002 when Indian gold demand fell by as much as 40 per cent to 149.8 tonnes, following a sharp rise in prices at the beginning of February.
WGC, in its quarterly review report, said that high level of stocks at the beginning of the quarter and the impact of global slowdown contributed to the fall in demand.
Official gold imports into the country in Q1 of 2002 stood at 84.7 tonnes (182.1 tonnes Q1 2001).
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