Gold bonanza: Prices falling, set to dip further

There is good news and even better news for gold consumers - prices of the precious metal have fallen to a nine-month low of Rs 8,725 per ten grams right ahead of the marriage season and are set to dip further in the coming weeks.

Mirroring weak trend in the global markets, the gold price here dropped by Rs 75 per gram on Wednesday, hitting its lowest level since October 2006. This represents a sharp plunge of over 13 per cent since July last year, when the prices had soared past the Rs 10,000-level to Rs 10,050 per ten grams.

"Overall, the trend is bearish in the market," commodity brokerage firm SMC Comtrade Vice-President Rajesh Jain said, adding that global production of gold has increased in recent times. He said even if the demand for gold increases due to marriage season, it may not impact the domestic prices much as these are linked to the global market.

Gold dropped 1.70 dollar, or 0.3 per cent, to 645.55 dollar an ounce in London today, after it fell 6.40 dollar last evening in the US markets. However, some jewellers in the national capital expect the prices to move up from the current level as low rates are likely to induce people for more buying.

"Gold prices are likely to take a U-turn from the current level as demand will be more," said a leading bullion merchant Rakesh Anand. Gold buying activities are likely to increase in the coming weeks with marriage season beginning on June 20. However, this is a relatively light wedding season, as against the major one toward the end of the year.

Source : www.rediff.com