Gold snaps four-day falling streak in India
New Delhi-India (May 25) Snapping its four-day falling streak, gold prices on Saturday recovered by Rs70 to Rs28,320 per ten grammes in India on emergence of buying by stockists and jewellers at prevailing levels.
However, silver met with resistance and lost Rs200 at Rs 41,500 per kg.
Traders attributed the recovery in gold prices to low-level buying by stockists and jewellers.
Gold had been under pressure in the past few sessions after the RBI eased curbs on imports, allowing select trading houses, in addition to already permitted banks, to procure the precious metal to boost exports.
In Delhi, gold of 99.9 and 99.5 per cent purity rose by Rs70 each to Rs 28,320 and Rs28,120 per ten grammes respectively. It had lost Rs1,330 in last four days. Sovereign, however, remained steady at Rs24,800 per piece of 8 grammes in limited deals. On the other hand, silver ready declined by Rs200 to Rs41,500 per kg and weekly-based delivery by Rs100 to Rs40,800 per kg.
Silver coins also dropped by Rs1,000 to Rs78,000 for buying and Rs79,000 for selling of 100 pieces.
Share prices of jewellery companies such as Titan Co surged after the Reserve Bank of India allowed banks to provide gold loans to the sector, while also expanding the number of private agencies that can import the precious metal.
The moves by the RBI, announced late on Wednesday, should increase supplies of gold and brighten the earnings outlook for jewellery makers after the government took tough measures to curb imports last year, analysts said.
Although the two steps alone are not expected to impact India’s current account deficit, they could reinforce expectations that RBI and finance ministry officials will soon move towards removing some of those curbs.
Restrictions on the import of gold were widely credited for helping the current account deficit shrink to 0.9 per cent of gross domestic product in the December 2013 quarter compared with a record high 6.5 per cent a year earlier, sparking a recovery in the rupee from record lows hit in August.
Possibly, there will be a $7 billion to $8 billion pickup in gold imports in a year due to this relaxation which is unlikely to put much pressure on the current account deficit and therefore the rupee,” said Pradeep Khanna, head of foreign exchange trading at HSBC in India.
Titan shares surged as much as 13.7 per cent, while Gitanjali Gems gained as much as 19.1 per cent. Other gainers included Tribhovandas Bhimji Zaveri and Shree Ganesh Jewellery House.
After Wednesday’s measures, more than 20 entities, including banks and agencies will be allowed to import gold. Meanwhile, the resumption of gold loans to jewellers, stopped last year, will make it easer to fund purchases.
