Gold sales in India’s villages might climb this Akshaya Tritiya as targeted farm welfare programmes are expected to help enhance discretionary spending on the precious metal, traditionally the preferred store of value in the hinterland.
Analysts believe that financial assistance under the PM Kisan Samman Nidhi programme should leave farmers with some surplus cash, which might be used to buy gold in the festive season. Rural India’s preferred stores of value are gold and land. “We can expect higher rural demand for gold because of the recent populist measures by the Centre and various state governments, which have boosted farm and rural income,” said Tapan Patel, senior analyst (commodities) at HDFC Securities.
Akshay Tritiya falls on May 7. Rural India buys gold ahead of Akshay Tritiya on receipt of sale proceeds from the wintersown crop. Local gold prices, therefore, usually remain firm in this season.
“Gold prices could go up depending on the movement of US interest rates and the overall condition of the US economy…. Gold is likely to be priced about $1,300-1,320 per troy ounce in the short term,” said Shekhar Bhandari, senior vice president and business head (global transaction banking and precious metals), Kotak Mahindra Bank.
“Also, domestic gold price depends on the level of the rupee. Keeping all these factors in mind, gold may either become dearer or cheaper by Rs 500 per 10 gm.”
In the spot market, gold was trading at Rs 32,000 per 10 gram. Prices trended lower on Wednesday as the dollar firmed against the rupee, although the metal remained near a two-week peak hit in the previous session. Internationally, spot gold was down 0.1 per cent at $1,302.36 per ounce. US gold futures slipped 0.2 per cent to $1,306 an ounce. Equities slipped on mounting concerns over global growth.
“global growth concerns on Brexit and the trade war are bullish factors for higher international gold prices, which would limit the downside in India,” Patel said.
“We expect gold prices to trade higher in the medium term, with resistance at Rs 32,800. Above this level, prices may head toward Rs 34,450, with strong support at Rs 31,500.”
NewsSource: Economic Times