Gold hits new high of Rs 71,080, reducing demand

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Gold hits new high of Rs 71,080, reducing demand

Gold hit a record high of Rs 71,080 per 10 grams on Monday, dampening demand for jewelry a day before a Hindu festival seen as auspicious for gold buying.

The price of the yellow metal increased by 1.72% or Rs 1,198 per 10 gm compared to last Friday.

The rise in precious metal prices comes ahead of Gudi Padwa and Ugadi, the auspicious days of the Hindu calendar marking the start of the new year in some parts of the country. The surge in prices has deterred potential customers who prefer to buy gold to celebrate this auspicious day, which this year will fall on April 9.

Sachin Jain, Regional CEO for India at the World Gold Council, said, “Gold has now reached an all-time high price of Rs 71,000 per 10 grams in India. Jewelry demand was almost stagnant in the first quarter of calendar year 2024 in rural areas and urban centers according to anecdotal feedback from jewelry retailers.

“Additionally, during the general election period of the next two months, the movement of gold and cash will be subject to increased scrutiny. Except during festivals, demand for gold jewelry is likely to remain subdued through much of the second quarter of 2024, even as prices moderate. Over the coming months, on the other hand, higher prices could encourage investments in gold-related digital and investment products,” Jain added.

The increase in prices leads to a drop in sales volume among jewelers, although in terms of value, sales are comparable to last year. Baby George, managing director of retail jewelry chain JoyAlukkas, said: “Volume sales declined by 5% in Ugadi compared to the last Ugadi which took place on March 22. We are offering one gram of silver for one gram of gold purchased to attract customers this Ugadi. “The current rise in gold prices is a combination of factors,” explained Jateen Trivedi, vice president (research analyst) at LKP Securities. “Firstly, increased geopolitical tensions in the Middle East are increasing risk perception, prompting investors to seek safe havens like gold Second, central banks around the world continue to increase their gold reserves, indicating long-term buying interest and strengthening demand. the prospect of rate cuts in the United States has a positive impact on gold prices “As gold prices reach an all-time high, the entire jewelry sector is bracing for tepid demand. “Amidst unstable gold prices and falling demand, we at Bhima hope to address this challenge by boosting demand for our offerings with the Ugadi, Puthandu and Vishu festivities in the South. followed by the upcoming summer wedding season and auspicious celebrations. On the occasion of Akshaya Tritiya, we expect demand for the yellow metal to increase in Q1FY25,” said Vishnusharan Bhatt, Managing Director, Bhima Gold.

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