Gold to further shine despite a golden run, says ASSOCHAM paper

New Delhi [India], Oct.11 (ANI):In the backdrop of continuous global political and financial risks coupled with revival in demand in the domestic market, gold prices are likely to stay firm in the range of Rs 30,500 -33500 per 10 grams despite the yellow metal having had a golden run up of about 25 per cent since January this year, an ASSOCHAM Paper has pointed out. The prices, at present are ruling at Rs 31,000-31,500 for 24 carat purity gold in major Indian cities, even as the festive demand seems to be picking up. "Going forward, the festive demand will get a further push from the wedding season, which is the main contributor to gold consumption in India. The upside in the short term of a few months is seen between Rs 1,500-2000 while the downside could be limited to Rs 1,000-2000 per ten grams, the paper said. While India has been among the two biggest consumers of the gold in the world along with China with imports in the past going even up to 1,000 tonnes per annum, the inflows this year have been quite low on a combination of factors including a prolonged strike by jewellers who vehemently protested imposition of excise duty on jewellery in the Budget and continuation of 10 per cent customs duty on imports despite expectations of reduction. Gold imports between January and September aggregated 270 tonnes this year against 658 tonnes in the corresponding period of last calendar year, adds the ASSOCHAM paper. "The moot question among the buyers and analysts is whether scope for any further run is left when gold has seen so much of a rally, the best among all the assets classes - including quantitative easing led stock markets. Revival in Indian consumption, financial risks in the Chinese economy, tapering tantrums of the US Federal Reserve as also close American Presidential elections are all seen as the push factors for the gold to remain as a safe haven," the ASSOCHAM Paper noted. Reading the trends and watching the global developments, the chamber Secretary General Mr D S Rawat said," gold is finding a strong support levels in the international markets and is expected to stay above USD 1200 mark, as a starting point for the next possible rally. All in all, given the state of play in equity, debt and properties, gold would stand out for quite some time". Yet another reason for the investors to seek refuge in gold by global markets is the prolonged phase of negative interest rates by a large number of central banks, which act as a big disincentive to the investing public to park their funds in banks which erode their wealth, rather than adding to the same. "The outlook for the precious metal remains upbeat taking into consideration several factors including reduced pace of the US Fed rate hikes, increased adoption of negative interest rates most recently in Japan , increased inflows in gold ETFs(equity trade funds) and decline in gold production". Back home, along with the official channels, smuggling of gold has seen up tick due to continuation of high import duties. The industry has been demanding lowering of duties to encourage official imports. (ANI)