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Gold coin, bar sales stopped by retailers

Mumbai, June 25 () : Gold price dipped by Rs 335 to bring it below the level of Rs 27,000 to Rs 26,685 per ten grams. Those trading in future today especially speculators sold their positions in the cue of a weak global trend.

Marriage and festival season in many parts of the country being over, gold has few buyers in the retail. Gold to be delivered in August in the MCE dropped in a turnover of 13,000 lots to touch Rs 26,895 per ten grams , a slide of Rs 335.

In a similar trading in October futures, the price fell by Rs 325 to touch Rs 26,685 per ten grams in 434 lots.

Speculators offloaded their investments after the US Fed Reserve announced the winding up of economic stimulus of buying bonds. With the dollar getting stronger, the value of gold will come down. However, in today’s development the US Fed has tried to underplay the winding up of economic stimulus which could lead to recovery of rupee and Indian stocks. In Singapore, gold fell 1.4 percent to 1,278.94 dollars an ounce.

AIGJIF representing gold merchants has asked members to stop selling bars and coins, which makes 35% of their business. This is to support the government’s efforts to cut imports and reign in current account deficit. 90 % of the merchants trading in the yellow metal are members of this body.

Reliance Capital was the first to voluntarily stop sale of gold coins. Around 2000 retailers in India would stop sale till CAD is under control. 35% of purchase of gold coins and bars are bought by speculative investments and the rest is for making jewellery gifted as dowry.

Stocks of jewellery companies dropped on news of curb on imports. This month import bill of gold has come down. The earlier import of gold was $135 million a day and is now $35 million. If the monsoon is good and a good harvest season would again revive demand for gold.

The average common man strongly believes that gold will be stable and even increase in value, said World Gold Council. It said that no curbs on supply can stop people from investing in the yellow metal. Indians have bought 20,000 tonnes of gold, double of what US federal Reserve vaults store.