Indian Gold Prices Seen Holding Stable After U.K. Gold Sale
Bloomberg News
July 6, 1999, 2:39 a.m. PT
Mumbai, July 6 (Bloomberg) -- Indian gold prices are likely to hold steady after the Bank of England today starts off a four- year plan to sell half its gold reserves, though local demand for the metal may fall this year, traders said.
The Bank of England will auction 25 tons of gold today in its first such sale in more than two decades. The sale comes two months after it unveiled plans to sell 415 metric tons of gold, then worth $3.5 billion, in phases, saying the metal is not a good investment.
The sale ''won't have much of an impact on Indian prices and demand at all,'' said Derrick Machado, who heads the World Gold Council in India, the world's biggest buyer of the precious metal. The U.K.'s gold sale announcements two months ago ''have taken its effect'' on Indian gold prices already, he said.
Other local traders, such as Makhanlal Damani, president of the Bombay Bullion Association, do expect India's gold demand to fall. He sees India's gold demand falling as much as 14 percent to 700 tons in 1999 as Indians acquire other financial assets to offset the falling value of gold.
Gold traded in Mumbai fell 10 rupees to 4,140.00 rupees per 10 grams today. That's 7.2 percent lower than May 6 when it rose to a 18-month high of 4,460.00 before the Bank of England announced its gold sale plans.
Gold for immediate delivery in London was little changed at $261.85 an ounce, near its lowest price in 20 years. Prices are unlikely to move much until after the bank announces the allotted amounts and price in the auction at about 12:15 p.m., traders said.
In May, the World Gold Council said India's gold demand fell 24 percent to 192.4 tons in the first quarter of 1999, over the same period the year before, after rising 11 percent to 815 tons in 1998. Global demand for gold surged 62 percent during the same quarter because of increased demand from other Asian countries and the U.S. |
