Gold price comes off all-time high, falls 2.76% in 2013 so far
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Gold price comes off all-time high, falls 2.76% in 2013 so far

Last Updated: Thursday, December 26, 2013, 12:46
 
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Gold price comes off all-time high, falls 2.76% in 2013 so far


Mumbai: Gold slipped from its peak level and was poised to end 2013 below last year's closing price after the government increased customs duty to 10 percent and imposed import restrictions to contain increasing demand for the precious metal.

As of December 21, the price of 10 grams of gold had fallen Rs 840, or 2.76 percent, from last year's close, while silver had lost Rs 13,630, or 23.57 percent, per kg.

The government took steps to curb imports of gold after concerns about the country's current account deficit (CAD). In the previous financial year, the CAD climbed to a record high of 4.8 percent of GDP on the back of higher gold imports and slowing exports.

Import duty on gold was increased to 6 percent in January. Two more hikes followed -- to 8 percent in June and to 10 percent in August.

The Reserve Bank of India, too, imposed restrictions on gold imports for banks, such as curbs on granting advances for the purchase of gold in any form, including primary gold, bullion, jewellery, coins, units of gold exchange traded funds and units of gold mutual funds.

Finance Minister P Chidambaram appealed to citizens to refrain from buying gold and help the government's efforts to trim the widening CAD as the depreciating Indian currency continued to cause worries.

The rupee hit an all-time low of 68.85 against US dollar on August 28, when gold touched its all-time intra-day peak at Rs 33,790 per 10 grams.

Since then, gold came under pressure as demand petered out at higher levels and on weakening global advices. The rupee has recovered and was quoted at 62.04 against the dollar at the close December 20.

The government's measures brought down gold prices although it remained out of reach for the common man.

Gold's fall was also partly due to reported moves by the central banks of bankrupt Cyprus and other troubled European nations to sell their reserves to meet bailout conditions.

Prices tumbled in the overseas market on liquidation by hedge funds on speculation and fears of an early end to the Federal Reserve's quantitative easing programme as US economic conditions improved.

In Europe, gold nosedived to below USD 1,200 per ounce in June, its lowest level since August 2010, as fears persisted that the US Federal Reserve would wind down its monetary stimulus. In London, spot gold fell to USD 1,180.71 an ounce.

Gold futures marked their lowest settlement in more than three years on December 19 after the Fed said it would taper its monthly bond purchases from January and the dollar rallied, dragging prices below USD 1,200 an ounce.

Gold for February tumbled to settle at USD 1,193.60 an ounce on the Comex division of the New York Mercantile Exchange. However, it ended at USD 1,203.70 an ounce on December 20 compared with last year's closing price of USD 1,656.30 an ounce.

Back home, standard gold (99.5 purity) started the year at Rs 30,620 per 10 grams from the previous year end's close of Rs 30,490 and logged a low of Rs 25,130 in the last week of June.
It bounced back on heavy offtake from stockists and investors on festive demand to conquer a milestone of Rs 33,000 per 10 grams. It then touched a life-time high of Rs 33,790 on August 28 before settling at Rs 29,650 on December 21, a loss of Rs 840 or 2.76 percent.

Pure gold (99.9 purity) resumed at Rs 30,750 from the preceding year end's close of Rs 30,625 and traded in a range of Rs 25,265 to Rs 33,950 (an all-time high) before ending at Rs 29,800 on December 21, a drop of Rs 825 or 2.69 percent.

Silver ready (.999 fineness) opened at Rs 57,950 from last year's close of Rs 57,820 and traded between Rs 40,190 and Rs 59,740 before ending at 44,190 on December 21, a decline of Rs 13,630 or 23.57 percent.



PTI

First Published: Sunday, December 22, 2013, 14:40


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