Gold had an eventful year in 2015. The yellow metal, which started the year on a highly positive note, went through phases of extreme volatility and managed to register the lowest rates in over 5 years around July when global cues brought value down spectacularly. Gold rates reached as high as Rs.2,870 for 1 gram of 24-karat variety in New Delhi in January, and also managed to fall below the psychological mark of Rs.2,500 around July when Chinese stock markets tanked and gold reserves in countries came into question.
On the domestic front, rates suffered in the second half of the year on the back of a weak monsoon, though demand picked up around the festive and wedding season in October/November. The Government of India also launched new gold schemes aimed at making use of the estimated 20,000 tonnes of gold lying in private hands in the country. The schemes have so far received lukewarm response and more efforts in this direction can be expected in 2016. All in all, the year was pretty eventful for gold in India and abroad.
Gold Price Trend in India in 2015:
|Highest rate in 2015||Rs.2,870 on 21st January|
|Lowest Rate in 2015||Rs.2,492 on 25th July|
Note: All prices shown are for 24-karat gold/gram in New Delhi.
Gold Price Trend (January2015 – March 2015)
|Prices||Rs.2,702 (2nd January), Rs.2,659 (31st March)|
|Highest/Lowest rates||Rs.2,870 (21st January), Rs.2,599 (18th March)|
|Major influencers/events||Seasonal demand, strong US job growth data|
Gold rates at the start of the year were the highest they could reach through 2015. Rates at the start of January hovered around Rs.2,700 and were spurred to Rs.2,850+ towards the fag end of the month on the back of seasonal demand owing to the wedding season and global cues. In fact, the graph for gold rate in India in January was mostly in the appreciative direction.
Gold was still strong at the start of February, however domestic demand cooled down towards mid-February while the global markets were also subdued. Markets were sliding for the remaining part of February as prices fell below Rs.2,700 at the end of the month. The RBI also lifted bank on gold coins and medallions import on 19th February after imports were prohibited towards the end of 2013 owing to a widening current account deficit.
Gold prices lay in the range of Rs.2,600-2,700 throughout March. Value tumbled during the first half of the month, dropping to Rs.2,610 by 17th March on the back of stronger-than-expected performance from the US economy. A strong US economy adversely impacted the price of gold as its demand as a safe haven drops.
However, gold rallied over the remaining half of the month to end around Rs.2,680 for the month. This was a result of positive global cues as well as increased buying by jewellers to cater to the festive demand. The World Gold Council reported increase in gold demand in the country by 15% in Q1 of 2015 as compared to Q1 of 2014.
Gold Price Trend (April 2015 – June 2015)
|Prices||Rs.2,658 (1st April), Rs.2,688 (30th June)|
|Highest/Lowest rates||Rs.2,806 (18th May), Rs.2,658 (1st April)|
|Major influencers/events||Akshaya Tritiya, Fed rate hike speculations, Gold Monetization Schemes|
Gold opened in April on a strong note, appreciating to Rs.2,733 by 6th of the month on the back of firming global trends. Weakening of US hiring activity clouded the forecast for increase in interest rates which prompted increase in demand on the domestic front. The wedding season demand for gold also helped spike value toward mid-April.
Akshaya Tritiya, which is considered to be an auspicious day to buy gold especially in South India, accounted for an increase of 10-20% in sales on the day. However, gold rates were lower by almost 10% as compared to last year’s figures from the same period. Gold rebounded to Rs.2,750 by the end of April as uncertainty about the Fed’s rate hike resulted in a weakening dollar and subsequently higher rates of gold.
Gold rates steadily appreciated in the first half of May on the back of positive mood in the country, wedding demand, declining equity markets, weaker dollar and strong global rates. The second half of the month saw prices dropping steadily as the US housing sector posted high growth and demand was sluggish on the domestic front. Prices fell further owing to speculations about rate hikes by the Fed which helped strengthen the US Dollar.
Prices were mostly stable through June and stayed in the range of Rs.2,700-2,740 till 24th of the month. Rates were marginally lower in the last few days of the month due to sluggish demand.
Gold Price Trend (July 2015 – September 2015)
|Prices||Rs.2,682 (1st July), Rs.2,653 (30th September)|
|Highest/Lowest rates||Rs.2,770 (25th August), Rs.2,492 (25th July)|
|Major influencers/events||Chinese economy meltdown, weak monsoon, rate hike delays|
Sustained offtake from retailers and jewellery stockists amid strengthening global trends helped spur prices at the start of July. However, the stock market crashes in China and subsequent large scale sell-offs of bullions by investors brought prices to 5-year lows. About 33 tonnes of gold was sold off in Shanghai spot market by investors, even as the Chinese stockpile of gold turned out to be lower than expected. Weak monsoon also played a part in subduing rural demands, which accounts for almost 2/3rd of overall demand for gold in the country.
The price drops continued for the first 10 days of August, figuring some of the steepest fall in bullion rates since 1999. Prices picked up from 11th onwards on low-level buying, weaker rupee and stronger global trends. Q2 data from the World Gold Council (WGC) showed a decline of 14% in gold demand as compared to Q2 figures from 2014 owing to drop in consumer spend within Asia. Gold rallied on the back of a strengthening dollar and good investor offtake, amid expected delays in rate hike by the Fed owing to a weaker global economy. Gold ended August comfortably above Rs.2,650 as jeweller activity heightened.
September was mostly stable for gold as prices fluctuated within Rs.2,600 and Rs.2,700. The prices were down around 8th of the month as gold fell to near three-week lows in global benchmarks amid speculations of a rate hike. A recovering rupee also affected lower gold rates in the country. Prices were lower around middle of the month before peaking towards late November. Prices declined at the end of the month by slight margins.
Gold Price Trend (October 2015 – December 2015
|Prices||Rs.2,642 (1st October), Rs.2,555 (31st December)|
|Highest/Lowest rates||2,735 (22nd October), 2,494 (2nd October)|
|Major influencers/events||Festive season, wedding season, rate hike speculations|
Prices in October started out on a cautious note. There was a steep climb in rates on 3rd on the back of rebounding international markets as well as good demand from domestic retailers and traders. Outlook for slim chances of any rate hike by Fed this year also helped spur value of gold in global markets. A slowing global economy as well as increased domestic buying on account of Navratra kept gold rates hovering above Rs.2,700 for the most of July, albeit prices dropped below Rs.2,700 in the last week on weakening demand and expectations rose of rate hike by the US Fed by December.
Gold rates in November were again shaky at the beginning. Looming rate hike by the Fed for the first time in almost a decade played a big role in keeping rates low, along with stronger US employment data for October. Muted domestic demand also affected rates, however the onset of Diwali turned the fortunes for jewellers around the country. Increased buying on Dhanteras followed by firm global markets helped spike rates in mid-November.
Towards the end of November, prices dropped to 5-year low levels in global markets as a rate hike looked inevitable before the end of the year. Prices however stabilised by the end of the month with no large changes.
December began on a positive note on short selling by traders to prepare for the upcoming rate hikes. Rates started falling by 3rd as participants trimmed positions following a weak global trend. Prices were mostly stable around Rs.2,590 before domestic demand and firm overseas trends help uplift prices. Lower gold demand from retailers and jewellers as well as eventual rate hike by the Fed kept prices low towards the end of the year even as global markets fared slightly better. Gold ended the year on at Rs.2,555.
Note: All prices shown are for 24-karat gold/gram in New Delhi.
Finance Minister Arun Jaitley announced three new gold schemes in Budget 2015 aimed at utilizing the metal lying idly in homes of citizens and in temples and other institutions.
Gold Monetization Scheme
This scheme was launched on 5th November by Prime Minister Narendra Modi to help monetize gold in private hands. The scheme is set to replace Gold Deposit Scheme as well as the Gold Loan Scheme. It aims to offer interest to depositors as well as loans for jewellers and other entities.
Sovereign Gold Bond Scheme
This scheme will assist bond holders to trade and monetize gold bonds at current market rates. It also offers fixed interest to depositors who can eventually redeem the gold bonds for monetary value. The gold bond scheme will eliminate the need for physical gold as paper bonds will suffice.
Indian Gold Coin
A large number of gold coins are imported into India on a yearly basis. This scheme aims to help domestic production as well as meet internal demand for coins, through an indigenous gold coin that is engraved with the ‘Ashoka Chakra’.
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