Date:14/10/2006 URL: http://www.thehindubusinessline.com/2006/10/14/stories/2006101400401300.htm

Back Record gold delivery on MCX

Gargi Shah

Mumbai , Oct. 13

Low prices of gold may have made out a good case for retail buying; but this demand does not seem to make any impact on prices. There was a record delivery of over two tonnes (2,173.80 kg) valued at Rs 191.53 crore on the Multi Commodity Exchange (MCX) for the October contracts, according to an official release.

Compared with prices prior to May this year (when they peaked at $730 before collapsing), the yellow metal is now ruling at a low not seen in the recent past. The price variation between the high and the low for October contract on MCX was Rs 3,000 (high Rs 11,300 and low of Rs 8,320).

Thus one can conclude that retail buying may only support the prices at the current levels, but may not push up prices, says an analyst.

Other factors

Various factors that had led to the price escalation earlythis year are currently absent. A steady to firm dollar and receding fears of inflation have lowered investor interest in the metal. Gold is a popular hedge against inflation, but this seems to have withered on account of low crude prices and softer commodity market sentiment. Geo-political concerns that had been a major driver of bullion prices seem to have waned, according to market sources.

Mere retail buying may somewhat prop up the current price levels but the absence of speculative interest may create potential for a further down side, according to an analyst. Spot gold prices as on October 12 were near the resistance level of $580 (New York) an ounce and a little over Rs 8,600 per 10 gram in India.