Gold is on a bear run in the international bullion market and dropped around 5 percent last week to close at $1,477.60 per troy ounce on Saturday. [break]
If the international price remained constant, gold will be available at around Rs 54,000 per tola when the market opens on Monday, said Mani Ratna Shakya, president of the federation.
The price of the gold has dropped in the international market as investors around the world have been pulling out of gold and investing on property, equity and fixed deposits where the interest rates have been improving. According to news agencies, the improvement in the US economy coupled with the Euro and Cyprus issues has led to investors shifting from gold to equities and other investment avenues.
Gold price would have dropped in the domestic market on Saturday itself had the market not remained closed owing to public holiday. “As the market remained closed for Saturday and Sunday due to public holiday, we are selling gold at the price fixed on Friday,” Shakya said, adding, “The price of gold will come down when the market opens on Monday.”
He further added that those planning to get married this wedding season will heave a sigh of relief as the price of yellow metal is decreasing.
“If the price of gold dropped by Rs 2,300 per tola as estimated by the federation, then gold price will hit one-year low of Rs 54,100 per tola,” said Shakya. He, however, added that drop in price will not lead to drastic rise in demand for the yellow metal. “I think customers will be on wait and see mood expecting further drop in prices,” added Shakya.
Daily demand for gold stands at around 35 kg, according to the federation. But as the wedding season has started, daily demand will increase by another 5-10 kg.
GOLD IN SHORT SUPPLY
Though gold price is expected to come down, customers willing to buy gold bars or coins have no reason to cheer about.
Traders are not selling gold bars and coins, citing shortage of gold to meet demand for jewelries.
“Most of the traders are not selling gold bars or coins because gold is in short supply in the domestic market. The mismatch between demand and supply has crated this situation,” said Shakya.
Tej Ratna Shakya, immediate past president of the federation, said the existing supply quota is simply insufficient to meet the surging demand for gold.
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