| Date: |
15-01-2016 |
| Subject: |
Slump in markets: Investors turn to gold for short-term gain |
|
KOLKATA: Indian investors are turning to gold for short to medium term amid a slump in the equity markets and a concurrent 4.85 per cent appreciation in prices of the yellow metal since the beginning of January on account of a weak rupee and increase in global prices.
Volumes on MCX have grown 45 per cent since the second week of December, said Hareesh V, analyst at Geofin Comtrade.
"However, these may not be long-term investments. Investors are looking for some short-term gain from gold as equities are falling. Unless the Chinese economy recovers we do not see long-term interest in gold from investors," he said. Gold prices increased from a low of Rs 24,740 per 10 gm on MCX on December 17, 2015 to Rs 26,123 on January 7. In the international market, prices touched a level of $1,112 per troy ounce on January 8 from $1,045.85 a month ago. In the physical market, however, demand for gold coins and bars still remains muted as retail investors do not appear keen on blocking money in gold as an asset right now.
"Retail investors are on a wait-and-watch mode. Since budget is drawing near, there is a feeling among people that the Narendra Modi government may bring down import duty on gold which is now at 10 per cent. This will bring down gold prices in the Indian market," said Bachhraj Bamalwa, director, All India Gems & Jewellery Trade Federation.
Investors must shun gold. Higher imports, fuelled by demand, will once again put pressure on India's current account deficit. That's not good for the economy. Equities tend to fetch better returns in the long term. The government should dissuade people from holding physical gold, and encourage investments in financial products. The gold bond scheme, for example, creates another financial asset equivalent to gold for investment. The scheme should be marketed more aggressively.
Source : economictimes.indiatimes.com
|