Due to the sudden hike of the price of gold, the traders are selling gold at 3 per cent discount in Mumbai bullion market to attract buyers.
This discount is on the landed cost. The gold importing banks declared it and it fluctuates with current international price and exchange rate of rupee.
The rate of gold was closed on Tuesday with a decline of Rs 70 at Rs 14,005 per 10 gram. This is nearly 2-3 per cent lower to its landed cost. In the afternoon trade dealers were offering prices in wide range of Rs13,700 to Rs 13,900 . At the time of higher price, there was hardly any buyer but huge selling pressure.
Though bought at Rs 200, the traders were selling gold at Rs 13,900. They were fearing that profit booking in gold may pull down the prices.
Pure gold also closed with a decline of Rs 70 at Rs 14,070 per 10 gram after hitting a high of Rs 14,160 per 10 gram on Saturday. Retail investors also stayed away from the market in anticipation of fall in prices.
According to Ashok Minawala, chairman of All India Gems & Jewellery Trade Federation, "This is a normal phenomena when retail investors keep off the market in case price spurts suddenly. But, they soon absorb the price and come back after two-three days."
As revealed by an analyst, domestic market followed the strong signal from overseas where gold opened at $905 an oz and fell below $894 in the early morning trade on profit booking. Apparently, this is the level when stockists offload their holding to jewellery maker.
Bhargav Vaidya, a bullion analyst with B N Vaidya & Associates has confirmed the sale of upto two per cent discount in spot market. He said, "Such discount is offered only when stockists buy at lower price and run short of money to keep the ball rolling."
In accordance with a market analyst, retail jewellers have seen the price rise of Rs 1,000 in the last one week on rising prices in the international market. Traders who bought at Rs 13,195 per 10 gram on January 19 will gain over Rs 400 per 10 gram even after offering a discount of 3 per cent.
In Delhi, the precious yellow metal shot up by Rs 40 to hit a record high of Rs 14,140 per 10 gram on increased buying by stockiest, driven by firming global trend after the US dollar weakened.
However, gold for delivery in February on the Multi Commodity Exchange (MCX) has gained marginally to remain traded at Rs 14085 per 10 gram while April deliver contract has gained 0.06 per cent at Rs 14053 per 10 gram in early evening trade.
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