Gold recovered its glitter on Saturday as it vaulted Rs 715 to record its second biggest single-day gain this year, driven by rising demand ahead of the wedding season and weak US economic data.
Prices are set to rise further in the days to come, traders said, advising those planning to buy the precious metal to do so right away.
The Rs 715 jump took the metal to Rs 26,400 per 10 grams, up 2.78% from Friday’s closing of Rs 25,685.
Prices had fallen to a low of Rs 25,000 per 10 grams last week in the key markets of Mumbai and Delhi, but have risen 6% since then. Globally, too, gold rose to a two-week high as large investors increased bets on the metal due to uncertainties in the US economy.
“Gold had bottomed out in recent weeks but the market is now looking at higher levels as prices can’t fall any further,” said Ashok Minawalla, a prominent Mumbai-based trader and former president of the Jewellery Trade Federation. “We may see higher demand on account of the wedding season,” he added.
The demand for gold in India — which recently overtook China to regain its position as the world’s top consumer — is likely to boost imports, which rose to 150 tonnes in October from 90 tonnes in September, far exceeding expectations of around 55 tonnes.
“Gold imports at this level could rise to $6 billion in October from $4 billion in September, way higher than the average $2.3 billion in April-August…,” a Nomura report said.
This may force the government to impose additional restrictions on imports to dampen rising demand. Rising gold imports had played havoc with India’s current account deficit (the difference between all dollar inflows and outflows) last year and contributed significantly to the run on the rupee, which had fallen to an all-time low of Rs 68.85 against the dollar.