'Gulf effect'makes gold dearer

Prashant Srivastava / TNN / May 8, 2006, 01:47 IST

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Besides stars and horoscopes, there is 'gulf effect' that is now beginning to have quite a say in ensuring wedded bliss of your daughter.

LUCKNOW: Besides stars and horoscopes, there is one other factor that is now beginning to have quite a say in ensuring wedded bliss of your daughter. It's called 'gulf effect'.
Since gulf countries are shying away from accepting dollar or euro currency in return for their liquid gold (crude oil) and are now adamant on accepting only pure gold in return, the price of the yellow metal in the local market skyrocketed to a historic high on Saturday.
In fact, the price of ten grams of 24 carat gold has nearly doubled in just around nine months. Same has happened to the poor man's gold (silver) as well.
If market sources are to believed then when the international bullion markets open up on coming Monday the price of gold (24 carat) and silver is expected to jump another couple of hundred rupees.

The price fluctuation is going to have a direct bearing on the Lucknow bullion market as well. Market pundits are also optimistic that the price escalation is going to continue for at least next six months as the international factors affecting the hike are not going to dwindle down.
The common man is bearing the brunt. Talking to The Times of India, general secretary of Lucknow Bullion Traders Association, Pradeep Agarwal, said the retail market for gold and silver jewellery in the city had shrunk to half its size.

"Lucknow bullion traders do business of almost two crore rupees a month. For the past six months this figure has come down to less than a crore. Even though sahalak is on, families are not able to come forward and buy jewellery as they would have liked to,"he said.
Agarwal predicted that the price rise in case of gold would be as much as Rs 2000 in the next two months. Talking about the common man's perspective with respect to the developments, he said, "We generally have two kind of buyers.
One who buys gold for the purpose of investment and the other who does it for celebrating auspicious occasions.
Clearly, those who are buying to invest are raking in the moolah but those who want to purchase for occasions like weddings or to gift are a sorry lot.
In fact, now we are being approached by customers to polish their old gold wares so that it can be used for the immediate need. They simply can't afford to buy".
Gold traders are also targeting commodity trading platforms like NCDEX and MCX as they feel that even these are adding on to the price rise.
"An investor can buy a kilo of gold using these platforms by paying just ten percent of the actual cost as margin money and then resell it.
Physical delivery is not at all involved in these transactions. They lead to price speculations by punters. In fact, we have decided to raise the issue in Parliament and want gold to be removed as a commodity in these exchanges", Agarwal claimed.

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