Gold drops post festivals, weddings lift premiums

Gold drops post festivals, weddings lift premiums
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First Published: Tue, Oct 27 2009. 01 57 PM IST
Updated: Tue, Oct 27 2009. 01 57 PM IST
Singapore/Mumbai: Jewellery makers across Asia returned to the physical market on Tuesday after gold prices dropped to a three-week trough, while weddings in India helped lift premiums, dealers said.
India’s festival season peaked with Diwali, the festival of light, two weeks ago, but the marriage season runs until December. Weddings take place during festivals in the world’s main consumer, where jewellery forms an essential part of women’s dowry basket.
“Demand is emerging as prices have come back to the stable level we have seen in the last two months. Marriage-related buying is there, but people who postponed buying earlier are buying more,” said Jayanti Lal of Mahavir Bullion Corp, a wholesaler in Vijayawada in southern India.
“Since prices fell yesterday, today people are waiting and watching. They think it is a good level, but will come to buy only at the end of the day. They are hoping for more falls.”
Gold fell as low as $1,036 an ounce, its weakest since 6 October, before bouncing to around $1,041 on bargain hunting. Bullion was nearly 3% below a lifetime high of $1,070.40 struck on 14 October after a recovery in the dollar spurred selling.
Premiums for gold bars firmed to 50 to 70 US cents to spot London prices in Hong Kong from 20 cents last week, although there were also offers at 30 cents.
“We’ve seen some physical buying today. If the dollar continues to recover, there will be pressure on the topside,” said Dick Poon, manager of precious metals at Heraeus in Hong Kong.
“Of course, this a correction right now. I think the long-term trend is still bullish for gold,” he added.
Dealers said worries that gold’s decline would be short-lived could spur more buying at lower levels, especially after India recorded better-than-expected festival sales in October despite record prices.
Indians bought 56 tonnes of gold during this year’s Dhanteras and Diwali week from 12-19 October, up 5.7% from the same period last year, the World Gold Council said.
“Markets have still not fully opened today, but demand should do okay. People should buy dips as longer term gold looks good,” said D.P. Naresh of Micro International, a wholesaler in India’s southern software city of Bangalore, home to several tech firms. Premiums were steady in Singapore at 60 to 70 US cents an ounce, while gold bars remained at a discount of $1 in Tokyo, because of persistent sales by retail investors.
“We are seeing some liquidation from the general public but the volumes are much smaller compared with last week,” said a dealer at one of Japan’s main bullion trading houses.
Gold rebounded from three-week lows as the US dollar took a break after a rally, spurring demand from bargain hunters and lifting other precious metals.
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First Published: Tue, Oct 27 2009. 01 57 PM IST
More Topics: Markets | India | Commodities | Gold futures | Gold |