High prices and lean period low demand hits gold dealers in India

May 29th, 2008 - 7:18 pm ICT by admin  

Mumbai, May 29 (ANI): Countrys gold traders face tough time as the sky rocketing prices deter buyers to buy the yellow metal which has already been hit by low-demand.

Experts and analysts observe that people are cautious of high prices and are keeping themselves away from the market.

It is being expected that the demand is likely to remain low for another few months due to lack of any festive or marriage season, which normally pumps demand for the yellow metal.

Jewelers in Mumbai said that they are facing the brunt owing to low demand.

Dealers said demand could remain slack until the festivals start in September, unless there were major dips when investors and jewelers could stock up.

I am not happy with the business because, I told you, the business is hardly 20 per cent remaining. How can we survive (with) all my staff and all expenditure, said Vishnu Kale, a jewellery shop owner.

Dealers further said that the already low demand has been further hit by the onset of the lean season.

In the recent past, the gold market has witnessed a northward trend in the prices of gold that is sought after both for investment purposes as well as in the form of an ornament.

Reports suggest that purchases for jewellery and investment fell by 50 per cent during the first quarter of 2008 in India due to high prices and the trend has been continuing ever since.

There are people who feel that the current trend is a buying opportunity as they can book profits by selling the metal at a higher price, but then, their number is miniscule.

We are purchasing gold as the rates are expected to go up further. The trend of the rise in gold prices is a continuous one. For the last two years the prices have gone up. Therefore, its good as investment, said Swati Darne, a customer.

On Thursday, country’s gold futures were slightly down, struggling to keep its gains after nearly two-week lows the previous day as crude oil eased and the dollar gained, analysts said.

Gold was nearly steady overseas as the dollar inched up after a better-than-expected reading for U.S. durable goods orders the previous day.

Gold generally moves in tandem with crude oil as the latter signals inflation while gold douses it. But the metal usually has an inverse relation with the dollar as the two compete for funds. (ANI)

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