Inflation-defying gold offers a respite

AT A time when consumers feel the pinch on the back of spiralling prices of most essential commodities, the yellow metal has offered them some breathing space. The precious metal saw another round of free fall on Tuesday in the domestic markets in the wake of strengthening dollar and sliding crude prices. The relentless fall since its recent peak has weakened the metal’s appeal as a hedge against inflation. In Mumbai, the prices of standard and pure gold tumbled by Rs 95 and Rs 90 to Rs 11,695 and Rs 11,765 per 10 gm, respectively. “As the prices slump by nearly Rs 2,000 per 10 gm in six weeks, consumers have already started their festival and marriage shopping well in advance as the current prices are most ideal for them,” said a leading bullion merchant in Mumbai’s Zaveri Bazar. The fall in prices has brought in consumers back to stores where sales have reportedly jumped nearly 10 times since the price fell below Rs 12,000 per 10 gm. The price of yellow metal touched a historic high of Rs 13,680 per 10 gm on July 15 this year. If prices stabilise between the Rs 11,000-10,500 level, sales could see another jump, he said. But the future direction of the metal will largely depend on the movement of the US dollar and crude price, he added. Dealers attributed the rising US dollar against the euro and a slide in crude prices as the main reasons for the yellow metal’s fall. A similar trend was reflected in other metros, too. In Delhi, after touching an intraday high of Rs 11,960, gold plunged by Rs 160 to Rs 11,800 per 10 gm in late trade as stockist took profits after a meltdown in the global markets. While, in Kolkata, spot gold lost Rs 80 to Rs 11,940 per 10 gm, it, however, rose by Rs 25 to Rs 11,810 per 10 gm in Chennai. In domestic futures, gold for October delivery fell by 1.2% to Rs 11,593 per 10 gm on the Multi Commodity Exchange. In London, gold bounced back as investors returned to market after the dollar lost ground against the euro and spot gold rose to $828.55/829.55 an ounce from $820.20/821.40 in New York on Monday.