Yellow Metal No Longer Music To Players As Prices Hit High Note

MUMBAI: Physical buying of gold has slowed down with volatility in gold prices driving away the market participants. Prices of gold in Mumbai since past one week have gone up to Rs 10,550 per 10 kg levels from Rs 10,100 levels.

Bullion trader Suresh Hundia said there is no demand at such prices. “Demand will come after January 3, when the market participants are active and prices come down,” Mr Hundia said.

Strong energy prices, geo-political tensions and weakness in dollar are all supporting gold prices despite thin volumes on exchanges.

Crude oil for February delivery on Wednesday rose $1.84 or 2% to settle at $95.97 a barrel which was the highest close since November 26. On Thursday, it traded at $95.65 a barrel levels, down 32 cents in electronic trading on the New York Mercantile Exchange.

An Ahmedabad-based custom house agent said that even gold imports are drastically down mainly due to high and fluctuating gold prices. “In addition to high prices, currently investments are happening in equities and real estate which is also affecting imports,” said the agent.Gold on Comex rallied in US trading session to one-month peak though on Thursday at 3.30 IST the February contract was down by a dollar at $828.5 per ounce.

Gold spot prices by 3.30 IST however were up by 30 cents at $824.30. On MCX gold February contract was marginally down at Rs 10,495 per 10 kg by 3.30 IST.

According to Debjyoti Chatterjee of Mape Admisi Commodities trading volumes and liquidity are expected to be thin due to year end holidays and a clear trend would emerge only in the first week of January.

“Gold is currently following crude oil movements and dollar and if they go up, gold can further go up and may also come down with selling pressure from the hedge funds,” Mr Chatterjee said.

According to Angel Commodities report, in the short term, by year end, gold could see some liquidation pressure due to large build up in speculative long positions and year end book squaring by funds.