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Mumbai, Dec-28: The spread between domestic and international gold prices has narrowed to 7.3 per cent in 1998-99 from 59.5 per cent in 1909-91, says the Reseerve Bank of India Report on Currency and Finance, 1997-98.
The narrowing spread reflects greater integration of the two markets. The average gold price in the domestic market has declined by 14.3 per cent to Rs 4,347 per 10 gram during 1997-98 from Rs 5,071 per 10 gram in the previous year.
The bearishness in the market can be attributed to low inflationary expectations, a strong dollar and gold dishoarding in south-east Asia. The monthly average gold prices in the Mumbai market declined during 1997-98 from Rs 4,778 per 10 gram at end-April 1997 to 3,995 at end-March 1998. The monthly average price of gold in Mumbai market moved in a lower range of Rs 4,850-3,900 per 10 gram in 1997-98 compared with the range of Rs 5,360-4,680 per 10 gram in 1996-97.
In the London market, the price of gold on an annual average basis declined by 15.6 per cent from$375.5 per troy ounce during 1996-97 to $316.9 per troy ounce in 1997-98. The monthly average price moved in the range of $351-279 per troy ounce during 1997-98 against $398-337 per troy ounce in 1996-97.
According to the World Gold Council, the increase in global demand for gold by 9 per cent has seen the demand for gold in India increase by 45 per cent to a 137 tonnes during 1997 from 507 tonnes in 1996, reflecting the increased response to decline in gold prices.
Gold imports had increased by 88.6 per cent to 528 tonnes in 1997 compared with 280 tonnes in 1996. The quantity of gold imported by NRIs increased significantly over the last five years from 132.4 tonnes in 1992-93 to 336.1 tonnes in 1997-98.
In the domestic market, the price of silver on an average basis increased to Rs 8,557 per kg in March 1998 against Rs 6,332 per kg in July 1997. In the Mumbai market, the price of silver moved in a range of Rs 9,350-6,310 per kg during 1997-98 against Rs 7,711-6,710 per kg in 1996-97. According toWorld Silver Survey 1998, aggregate silver imports into India declined to 3,104 tonnes during 1997 from 3,281 tonnes in the preceding year.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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