Chennai: After the steep rise in gold prices, a huge sell-off was witnessed in the country’s key gold markets on Friday. Gold is now available for $14 discount at the trader level, as the precious metal broke $1,400-an ounce mark in the international market, a near six-year high. In the Indian futures market, gold moved up to Rs 34,400 per 10 gm.
“Gold was available for $2 premium over and above the landed rate 15 days back. After the steep rise, it is now available for a discount of $14 per ounce,’ said Suresh Hundia, former President of the Bombay Bullion Association. The country had seen similar level of discount one-and-a-half year back when prices had moved up sharply for a brief period.
According to him, there has been a substantial fall in the number of buyers of gold on Friday in all the main hubs of the yellow metal, including the Zaveri Bazaar in Mumbai.
On the contrary, customers are coming out to sell their gold, as prices crossed Rs 34,000 per 10 gm in the domestic spot market. However, there is no buyer demand for the metal. Not many traders or jewellers are keen to buyback the gold at higher levels.
“Discounts will probably remain for a few more days if prices prevail at the current levels. Once there is reversal of price trend, the situation could change,” said Hundia.
As per data from the World Gold Council, total gold recycled in India in Q1 2019 was 16.1 tonnes compared to 14.1 tonnes in Q1 2018, a rise of 14 per cent. With the prices moving up, the current quarter is expected to see a higher growth in the quantum of recycled gold.
On Thursday, gold had moved up after the US Federal Reserve signalled interest rate cut for this year. On Friday, investors further rushed to safe haven assets after reports of Iran shooting down a US "spy drone" came in, indicating geo-political tensions, though later on President Donald Trump took a softer view of the drone incident, saying Iran may not have intentionally downed the drone. “I find it hard to believe it was intentional,” he said.
