Friday, August 22, 2014

Bullion MCX Gold Weekly Review & Trading Tips

Price of Gold fell down Rs 140 in the markets quoting at Rs 28,140 per 10 grams in Delhi on weak cues from the global markets, amid subdued demand from jewellers.

Gold demand about 40% lower in the last quarter

In the time period of April-June 2014, the never-ending demand for Gold slumped 39 percent coming down to 204.1 tonne from the last record at 283.7 tonne in the first calendar quarter of 2014. World Gold Council (WGC) said, "India's demand for the precious yellow metal fell in the second calendar quarter as investors are hoping see a fall down in the high prices of the commodity."

On yearly comparison, the second calendar quarter standing at the demand of 204.1 tonne of Gold in 2014, demanded 133 tonne more last year as the consolidated demand of the same quarter in 2013 was 337.0 tonne. India's demand for Gold declined 41 percent in Rupee values over the corresponding quarters in the second quarter of the 2014 over 2013. Value of the gold demanded slipped from Rs 85,533.8 crore in April-June 2013 to Rs 50,564.3 crore in the same time frame.

Managing Director of WGC's Indian branch Somasundaram PR said, "The potential buyers of the commodity hoped to acquire gold at the price levels of Rs 25,000 but the uncertain rates due to election of new government tamed down the demand for the quarter." According to Somasundaram's the fall in demand is temporary and the only reason for the steep decline is attributing to higher expectations of investors from the government to lower Gold price by easing restrictive norms. Further, the next quarter will show a clearer picture of the demand curve. On the other hand, he pointed out to a little hope that India is able to curb the high rising demand for the commodity.

"However, when we look at the long-term averages and compare them on review of the preceding five years, Gold's demand in the time frame considered, i.e. Q2 of calendar year, remained high eradicating the changes in policies and other economic factors which encouraged other saving options," Somasundaram added. The precious metal is useful  aesthetically in creating precious jewelery in India. Jewelers demand for the commodity dropped from 188 tonne to 154.5 tonnes equal to 18 percent in the Q2 of calendar year 2014. 

In terms of rupee, the demand from jewelers fell by more than 20 percent as it recorded sale of Rs 47,716.2 crore in consolidated period in 2013 and Rs 38,269.5 crore this year. In investment view, the consolidated demand for the quarter came down 67 percent which equals 49.6 tonne holding investors demand at 149 tonnes. In currency valuation, gold demand for the quarter fell from Rs 37,817.6 crore recorded in Q2 of 2013 to Rs 12,294.8 crore in the same duration this year. "We believe that as the price of gold is leveling to a steady rate and governance in stabilized in the country, the demand is going to tip up in the third quarter," said Somasundaram.

Other reasons which might raise gold's demand in the Indian market include, the positive influx from monsoon outputs and the upcoming wedding season when demand from jewelers generally rises. India is having about 22,000 tonne of gold which accumulates over a trillion US dollars, Somasundaram said, adding therefore, as a developing economy the country can use the resources for growth in various sectors.