Having seen a sharp 4 per cent rally during the festival month of October, gold prices are showing signs of easing, mirroring global trends amid subdued physical demand in the domestic market.

The physical demand for the yellow metal has remained subdued since the Diwali festivities in October. The investment demand for gold has taken a hit, while those buying for the marriage season have curtailed their budgets and gone for smaller quantities.

However, jewellers feel that stability in prices at the ₹38,000 levels is giving some confidence to the buyers. In November, gold prices ended with a downside of about 2.4 per cent, against a nearly 4 per cent rally in October.

“The prices have stabilised at current levels and we are seeing some marriage-related demand,” said Shantibhai Patel, President, Gem & Jewellery Trade Council of India (GJTCI). “The budgets, however, have shrunk and the ticket size has come down as compared to previous years. Also, the investment demand for gold has taken a hit as there is no spare money with people right now.”

Global optimism on an improved trade outlook between the US and China, accompanied by a weakness in India's physical market, has halted a gold price rally in November.

Spot gold prices as quoted by the India Bullion and Jewellers Association (IBJA) stood at ₹38,019 per 10 grams (PM rates for 999 purity without taxes), which is marginally up from the previous close of ₹37,933.

However, on Friday, the last trading day of November, gold futures for December contract traded positive at ₹37,740 per 10 grams, marginally up 17 points from Thursday’s close.

The futures reflected the global trend in the prices, which quoted at $1,453.5 an oz, nearly flat from the previous close. During the month, CME Gold December futures had corrected by nearly 4 per cent from its highs of $1,519 an oz at the beginning of November.

An Angel Broking outlook about gold suggested the yellow metal may face some pressure due to optimism around a US-China trade deal, which would “result in investors dumping safe haven assets, in turn pressurising the yellow metal in the coming trading session.”

 

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