Buyers stay away as gold prices shoot up
New Delhi, Apr 6 (UNI) With gold prices edging close to the 600 dollar mark in the international market, buyers in India are staying away expecting a correction, industry sources here said.
Gold prices touched a new 25-year high yesterday at 594 dollars, with support from funds and investors. However, dealers here are of the view that profit-takers could generate a drop in prices.
According to dealers, the rise in gold prices is also in sync with the increase in prices of silver.
While there is not much of a demand for gold or jewellery in the market, prices of the yellow metal are rising every day to keep pace with silver which has already crossed the Rs 17,000 a kg mark with international pricing hovering over 11.50 dollars an ounce, a leading dealer said.
''Gold and silver are walking together giving company to each other,'' he quipped.
Those who bought gold a few days ago at 550 dollars levels might be lured to sell at the current 590 plus dollar levels.
''If prices continue to surge, consumers may withhold their purchases till a steady trend prevails and in that case sellers will wait for the opportunity for the prices to go up further,'' said Mr Ram Chand Soni of R C Jewellers.
Mr Soni said only high networth buyers were buying jewellery while middle class buyers were either absent or were purchasing only for their immediate requirements like wedding and other occasions.
All India Sarafa Association (AISA) President Sheel Chand Jain is of the view that once the gold touches the 600 dollar mark, the downward correction will start.
Mr Jain recalled that 25 years back on January 4, 1980, gold prices had jumped to the 873 dollar mark.
The AISA President attributed the current surge in prices to the trend of speculative business in the bullion market with the start of the commodity exchanges.
The buying and selling activity always comes to a standstill when prices behave abnormally, he added.
On the silver front, Mr Shrikrishan Goyal Chandiwala, General Secretary, Delhi Bullion Merchants Association (DBMA) said the reason for a sharp rise in silver prices was the huge purchases by the mutual funds worldwide. Even in India, Mutual Funds have bought to the extent of over Rs 11,000 crore.
Silver is expected to cross Rs 18,000 a kg and gold is no exception, he said.
If both the metals maintain the tempo, soon gold would embrace the 600 dollar mark and silver the 12 dollar mark an ounce.
Earlier, mututal funds were active in USA only. Now India has also permitted mutual funds for investments.
Mr Chandiwala said, ''even if there is correction, it will not be much as gold is considered a safe investment.'' ''It is a safe haven for investors than investing in property or stocks,'' Mr Chandiwala added.
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