Gold demand evaporates on record price

Gold demand evaporates on record price

Mumbai: Record high price dried up demand for gold in India, the world’s biggest consumer, on Wednesday as buyers preferred to postpone purchases, bank dealers and jewellers told Reuters.

Gold futures on Multi Commodity Exchange of India (MCX) hit a record high of Rs19,257 per 10 gram on Wednesday afternoon.

“Demand is absolutely nil. People are not even making inquires," said a dealer with a state-run bank dealing in the bullion.

The dealer said he hasn’t sold a single kg of gold till afternoon, compared with a total of 55 kg on Tuesday. The mood wasn’t different in jewellery shops across the country.

“Prices are way above psychological acceptance level of buyers. They are still finding it difficult to digest gold above 19,000 rupees," said Kapilkumar of Chokshi Arvind Jewellers in Mumbai.

The bank dealer and Kapilkumar feel record high price may dent demand during the country’s peak festival season.

Traditionally, demand for gold in India remains strong during the September-November festival season. Dhanteras, considered auspicious day for buying gold, is in November.

International spot gold was steady on Wednesday after surging to a record in the previous session, and more upside is likely as investors remain nervous about the global economic recovery.

“Traders feel comfortable in buying gold below 18,600 or $1,250. Once price rise above that level, most people prefer to wait for a dip," the bank dealer said.

A Reuters poll has estimated India’s gold imports in 2010 at 504.5 tonnes, up by 24.5 tonnes from last year.