Mumbai, Sept. 1: Gold prices touched yet another high on Wednesday as concerns over the health of the US economy pushed the investors towards the metal.
Gold prices closed at a level of `19,230 per 10 grams in Mumbai on Wednesday. Prices of silver are also up.
Apart from bad economic news globally, a weak rupee is also pushing up prices in India. In the near term however, experts feel there could be a small correction in the yellow metal.
“Whatever data points are coming out of the US are not very good,” says Mr Kunal Shah, of Nirmal Bang Securities. “That’s driving investors to gold as the pace of recovery is not very convincing,” he adds.
“Apart from the fear of another downturn, gold prices are going up because of a weakening rupee,” says Mr Rajesh Mehta, managing director, Rajesh Exports. He feels that while gold prices are in uncharted territory now, a drop in the next six months is likely.
The expectation of a correction is echoed by Mr. Kuljeet Kataria of Motilal Oswal. “Apart from other factors, gold consumption is expected to be strong in India this year,” he says.
“This is because the monsoon has been good, which should lead to higher rural incomes — places where there is no banking. So that should lead to an increase,” he adds.
However, a 6-8 per cent correction is likely in the near term, he says.
Apart from gold, silver prices have also been going up over the past few weeks. Silver prices crossed `31,000 per kg on Wednesday.
Analysts say that apart from its status as a precious metal, silver also benefits as there is a strong industrial demand in many emerging industries.
Gold in Q2
Supply
Mine supply: 644
Government sales: 8
Old gold: 496
Total supply: 1,132
Demand
Jewellery: 406
Industrial & dental: 107
Investment: 243
ETF: 291
Total demand: 1,047
* Gold jewellery demand in India, the largest jewellery market, was little changed from year-earlier levels, down just two per cent at 123 tonnes.
