Gold prices may have ended at a five-month high, marking their biggest monthly gain since January this year, but in India discounts are on offer. India Post has announced a 6.5% discount on the sale of gold coins on the occasion of Pushya Nakshatra which falls on September 12, this year.
The word `Pushya’ means to strengthen, to fortify. The word etymologically means `to nourish’, and traditionally a person cannot think beyond gold investments on this day. Pushya Nakshatra is considered the most auspicious day to make valuable investments and purchases.
It is a customary practice for people to purchase gold and, by observing tradition, increasing their good karma and good efforts.
On the occasion of Pushya Nakshatra, a special discount is being offered, said Chief Postmaster General Poornachandra Rao. Gold coins, sold in association with Reliance Money Infrastructure, are available in denominations ranging from 0.5 grams to 50 gram denomination coins, he added.
“Given the day’s meaning to nourish or to replenish, multiply and strengthen, consumers are wont to go overboard by buying gold in any form. The price of gold does not make a difference at this time,” said Pushkarna Sharma, bullion retailer.
On Monday, gold rates gained in major metros in India. In the Mumbai market, pure gold was up by $11.90 (Rs 660) at $585.35 (Rs 32,455). In Ahmedabad, the price of the precious metal shot up by $12.
Buoyed by a firming global trend, gold prices have surpassed all the previous records to trade at a fresh high. A firming trend in the spot market, supported by the upcoming wedding and festive season demand has also helped gold futures to touch new highs.
In the international market, though gold moved down slightly, it still remained high with investors staying on the fence over expectations of Federal Reserve’s quantitative easing later this week.
At the Multi Commodity Exchange, gold for delivery in December rose by 0.36% to trade at an all-time high. Market men said the rally in gold futures was mostly driven by a firming trend overseas on speculation that central banks from the US to China would increase stimulus as economic data disappoints, raising demand for the precious metal.
Chirag Mehta, fund manager at Quantum Multi Asset Fund said, there were global factors that were supporting the price of gold.
“There has been a growing anticipation that slowing growth may spur more action from central banks. Japan’s economy slowed more than expected in the second quarter. The US economic recovery is still fairly opaque. Most of the economic measures from China point to a severe slow down,” he said.
Stating that the European Central Bank President Mario Draghi had promised last month to do whatever it takes to preserve the euro and the Federal Reserve pledged to ease policy further if necessary, Mehta said the Fed minutes also hinted at more quantitative easing measures to support the economy.
“The Fed chief’s defence of the central banks previous easy money policies was a signal that more similar measures are in the offing. This anticipation is the driving force in the gold markets as of now,” he added.
Stating that gold demand fell 7.1% in the second quarter as investment slid and Asian jewellery purchases declined amid higher local prices and concern about economic growth, Mehta said the weak rupee was also discouraging Indian customers to buy gold.
“Gold imports by India, the world’s largest bullion buyer, slumped 56% in the second quarter. Overseas purchases plunged to 131 metric tonnes in the three months ended June 30 from 301 tonnes a year ago. Demand for jewellery dropped 30% to 124.8 tonnes, while for coins and bars for investment purpose slid 51% to 56.5 tonnes. But that could only be part of the whole,” he added.
Manish Khera, bullion retailer, added that in times of uncertainty, gold has always been considered a safe investment haven. “The low interest rate regime also contributes to the price rise. In India, the rise is more rapid on account of the steep rupee depreciation. Although the outlook on the rupee has improved, we are still expecting gold prices to remain at elevated levels. Especially with the forthcoming festive season,” he added.