Gold to trade at Rs 31,000 levels by December: experts

Gold prices are likely to hover at around Rs 31,000 per 10 grams by the end of this year even though demand for the metal may remain at 860 tonnes after the government's restrictions to curb imports, according to experts.

"Weak rupee and higher duty will keep the landed cost of gold higher. The yellow metal is likely to be around Rs 30,500 to Rs 31,000 level by December end," Naveen Mathur, head of commodities at Angel Broking, told PTI in Mumbai.

Gold MCX price was Rs 28,600, while in the international market it was at $1,376.70.

Mr Mathur said if government takes more measures to discourage import of gold, it will affect its supply thus putting more pressure on its prices.

Internationally, gold is range bound at present with a bearish outlook due to strong US dollar and reports of improving American economy.

"Gold will be around $1,375-1,400 an ounce level by the year end. It will be pulled by opposite fundamentals like US dollar gaining strength and the growing Chinese demand," he said.

According to Mr Mathur, demand for gold is likely to remain same as that of last year.

"Even as the good monsoon indicates that demand for gold will pick up during the fourth quarter, high prices following higher customs duty and lack of supply will keep it under control," he said.

However, the World Gold Council, which represents leading gold mining companies across the globe, said demand for gold in India and China was expected between 900 and 1,000 tonnes (in each nation) in 2013.

"Business is definitely going to be affected by around 25 per cent during this festive season on high price and availability issues," said Vicky Badera of Panchkesari Badera jewelers.

"Marriage or occasion buying will take place but casual buying will be affected; so there will be effect on the business for sure, as raw material availability will also factor in," he added.

On government's decision to restrict gold imports, Mr Badera said, "To some extent the measures taken by (Finance Minister) P Chidambaram to control Current Account Deficit by restricting import of gold is understandable as it is affecting our economy; we too at jewellers association and gold council have decided not to sell gold bars and coins but indulge only in pure jewellery business."

He added, however, that the government should also look at other means to sort out the issue of gold imports by talking to jewellers association rather than putting in strong measures that will harm the industry.

However, Shameer Shareef, associate director of Malabar Gold and Diamonds, said there won't be much impact on jewellery business during the season due to spurt in prices.

"People who have to buy  will definitely buy - especially for occasions; people buying for investment purpose also will buy because prices are going high and they fear that it might cross over Rs 4,000 per gram."

"Buyers are mainly of higher middle class category, lower middle class will also continue to buy but the quantity will be minimal and selective," he added.

Stating that macro-economic situation and restrictions on imports of gold have influenced the market by increasing gold prices, he said "it will pave the way for grey market to open up for second market people who will look for options."

Customers say they are opting to buy gold jewellery only on occasions and are going for fixed budget spending.     

"I'm here to buy gold for my daughter's marriage, prices are too high, but will have to buy as it is an occasion. I'm looking to purchase now in the budget range I have fixed," said Dilip Khariwal, a city-based businessman.

Another customer, a city based professional, Yamini said, "I have decided not to buy gold for now looking at the prices; it is above the level I had budgted it to be," adding, "Price has risen like anything."