“International gold prices have been steadily declining over the weeks, as dollar has been getting stronger in anticipation of the US interest rates going up soon,” Rajesh Exports Ltd chairman Rajesh Mehta told IANS.
From a peak of $1900 an ounce in September 2011, spot gold price slumped to a new five-year low of $1,086 in international markets on Thursday, breaching the $1,100 barrier for the first time on signs of the US economy recovering, jobs increasing and equity-debt markets turning attractive for investors.
After international oil prices plunged by 50 percent over the year, it is the turn of gold to lose out, as investors shy away from the precious metal and head to stock and bond markets.
“Large international funds have stopped buying gold, as returns on it are no longer attractive due to dollar strengthening in a volatile currency market and shares turning once again bullish,” said Mehta, whose company on July 27 bought the world’s largest refining firm Valcambi in Switzerland for $400 million (Rs.2,569 crore) in all-cash deal.
India has overtaken China as the largest gold consumer (900-1,000 tonnes per annum) and is also the largest buyer to meet growing demand from retail customers, institutional users like jewellery, electronics industry, and dentistry and as an investment avenue.
“I think gold price has bottomed out after dipping to a new low Rs.25,000 per 10gm of 24 carat from a high of Rs.33,500 year ago for similar reasons,” Mehta said.
“I think prices will be in the current range till the festival and wedding seasons begin in October when greater demand will fuel the price again and remain steady thereafter,” he added.