KOCHI: Low price may trigger immediate to short term hike in the price of yellow metal but year 2017 may not be good for gold, experts point out.
Gold price reduced below the Rs 28,000-mark by plunging Rs 500 to over 10-month low of Rs 27,750 per 10 grams. In the national capital, gold of 99.9 per cent and 99.5 per cent purity plunged Rs 500 each to Rs 27,750 and Rs 27,600 per 10 grams, respectively, a level last seen on February 6 when it had closed at Rs 27,700. Sovereign, however, remained unaltered at Rs 24,000 per piece of eight grams.
The reasons can be attributed to reduced offtake by jewellers owing to negligible demand at the domestic spot market in view of the prevailing cash crunch following demonetisation hit sentiment.
“Global trend was followed in the domestic market. Owing to short covering there may be slight increase in price of gold, 7 to 8 per cent, by the end of this month. But, 2017 will remain as a bad year for gold as price will be subdued. The federal reserve may increase interest rates next year. Due to increase in oil prices short term investors have shifted their focus to oil as well,” said Daman Prakash, Director, MNC Bullion Private Limited.
Globally, gold price fell 1.26 per cent to $1,128.20 an ounce. Nishad AK, Executive Director, Malabar Gold and Diamonds feels that the impact of policies of the new US president Donald Trump will be reflected more on gold.
“Instead of investing in gold, investors world over keeps the dollar. Hence the gold market will remain choppy in the future. When Trump takes charge as the US president in January, the impact of his policies will be visible more on gold,” he said.
Silver too dipped below the Rs 40,000-mark by tumbling Rs 1,350 to Rs 39,600 per kg on poor offtake by industrial units and coin makers. According to Ramesh S Pai, partner, A Geeri Pai jewellery, people are now taking a ‘wait and watch’ stand in India before taking the buying decision.