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24 February 2024

Gold prices hit record in India

By Agencies

Gold futures advanced to a record in India after bullion prices abroad rallied above $950 an ounce and the Indian rupee weakened the most in a month, cooling demand for the imported metal in the world's biggest consumer.

April-delivery gold gained as much as 2.9 per cent to 15,131 rupees (Dh1,140) per 10 grams on the Multi Commodity Exchange of India, the highest since the bourse began trading the metal in November 2003.

Immediate-delivery bullion added as much as 2.1 per cent to $961.13 an ounce, the highest since July 22, as investors bought the metal as an alternative to slumping equities and to preserve their wealth as the global economy sags.

Highest-ever prices may crimp demand for bullion from Indian housewives and jewellers in the wedding season started last month, slowing a rally that has pushed global gold prices up 30 per cent in the past three months.

"Record prices have seriously hurt demand. The general economic slowdown is not helping demand either," said Rajesh Mehta, Chairman of Rajesh Exports, India's biggest producer and jewellery exporter. Imports by the Asian nation this year may more than halve to 250 tonnes from 720 tonnes in 2008, Mehta said.

India's gold purchases have declined for three consecutive months with imports in January slumping to about two tonnes from 24 tonnes in the year-earlier month, according to the Bombay Bullion Association, a traders' group.

The Indian rupee has declined 19 per cent in the past year, making gold imports expensive, and spurring housewives and jewellery owners to sell old ornaments, Mehta said.

Si Kannan, Associate Vice-President at Kotak Commodity Services in Mumbai, said there was an unprecedented increase in sale of scrap gold in India.

However, the world's largest gold-backed ETF, New York's SPDR Gold Trust, said its holdings rose 15 tonnes to a record 985.86 tonnes on Friday. But India's gold demand was slack as high prices put traders off purchases.