16 Jul 2013 07:54

NEW DELHI, July 15 (Bernama) -â€" Gold price in India is expected to surge to Rs28,000 (US$467) per 10 grammes again towards the year-end as the demand is to increase due to the wedding season, a study revealed.

“The price will hover between Rs26,500 (US$442) and RM27,500 (US$459) before crossing Rs28,000 per 10 grammes around November and December,” a study by the Associated Chambers of Commerce and Industry of India (Assocham) on gold trends showed.

“We tend to disagree with the general discourse among analysts who say that the gold has lost its flavour in favour of equities largely on the back of improvements in the US economy,” said the study.

It said even if the assumption that the US economy was improving was correct, then the next consequence would be the increase in inflation in the American economy.

“At that point of time, gold will again be seen as a safe haven against inflation,” said the study.

The study was based on inputs from several domestic and international analysts and those in the bullion trade and fund managers.

It said the continuing pressure on the rupee would also influence gold prices in the domestic market as the landed price would increase with currency depreciation.

The rupee has gone down to a record low of Rs61.20 per US dollar in recent days.

As for the domestic demand for the next few months, it said that would be largely driven by end-users.

Some of the pure-play investors have burnt their fingers after betting excessively on the yellow metal and investing with the bullish outlook even when gold was selling in excess of Rs33,000 per 10 grammes, the study said.

In the world market, gold price has tumbled to US$1,200 per troy ounce from US$1,800.

“Though the gold exchange-traded funds are a small fraction of the overall bullion trade, investors have lost significantly and are not expected to return for some time,” the study said.

Investors would return once the price cross the Rs28,000 mark as most of them follow the trend and are not contrarian in nature, the study added.