Gold may hit Rs 15k ahead of Diwali

1 Oct, 2008, 0600 hrs IST, ET Bureau
MUMBAI: Gold, it seems, would be the only silver lining to the dark cloud of the global financial crisis. Most investors are flocking to the asset, with equities, currency markets and even commodities in doldrums.

This would mean a more expensive yellow metal for Indian consumers this festival season. The weaker rupee, would only add to the expense. Analysts expect that gold could touch historical levels of Rs 15,000 for 10 gm ahead of Diwali.

“Outlook for gold price is certainly bullish owing to several factors that include safe-haven buying in the period of uncertainty, seasonal demand in Asian markets and increased buying by Gold ETF across the globe. Bullion prices could witness dramatic incentives in coming weeks and possibly breach their previous highs,” said Debjyoti Chatterjee of MAPE Admisi Commodity Research.

Besides, the rupee has depreciated by over 17% this year, which would make gold more expensive for the Indian consumer. Krishna Nathani MD of Chennai-based India Bullion Investor Services believes that gold could touch $950-980 per ounce levels in the next couple of weeks. “Gold has been extremely volatile. On Monday, it ranged between $860 to $925 levels,” he said.

He estimates that if gold crosses $950, given the rupee weakness, it would be well above Rs 15,000 per 10 gm. That would mean, gold would be trading at record levels in India even if it doesn’t touch the March 2008 record levels in the international market.
Gold price had touched levels near Rs 13,700 in July last. It closed at Rs 13,410 per 10 gm in Mumbai. With the festival of Navaratri having begun, retail sales are expected to pick up. Ahead of Diwali which falls on October 28, traders are not sure how consumers would react to the high price. Unless the price falls retail sales are expected to be dim.

via: E.T