Gold trading flat, reflecting overseas trend

MUMBAI: Gold was trading flat at Rs 27,548 per 10 gm in early afternoon trade on the Multi Commodity Exchange of India (MCX), reflecting the trend overseas, where the yellow metal was steady at $1,239.91 an ounce on a rebound in global equity markets as investors reassessed the likelihood of the US Federal Reserve raising a key lending rate amid worries of deflation in the Euro area and Japan.

On Monday, a day before Dhanteras, which is an auspicious period for Hindus to buy new items like gold and embark on fresh financial ventures, feedback from jewellers and bullion dealers on consumer demand was mixed.

In Tamil Nadu, Emerald Jewel Industry’s MD K Srinivasan termed the pre-Diwali demand as a “flop” while GR Ananthapadmanabhan, MD of GRT said footfalls have been robust even as prices have rebounded from a low of Rs 26,534 (less tax) to current levels over the past two weeks.

London-based precious metals consultancy firm GFMS Thomson Reuters was of the view that footfalls have fallen in the run-up to festivities.

“Beginning last week, footfall to stores has already fallen sharply after prices notched up following the recent rise in gold prices. This unfortunately is happening just as retailers had replenished stocks to their optimum level and we are just a week before Diwali. This in essence means fabricators will be averse to stocking more than current levels considering consumers’ high price elastic response,” said Sudheesh Nambiath, senior analyst, GFMS Thomson Reuters.