Gold prices to regain shine on festive demand: Bullionvault

Oncoming festival season in India is likely to keep gold prices firm, feels Adrian Ash, Editor- Gold News & Head of Research, Bullionvault, adding, silver too is expected to stay firm.

Silver prices have hit an 11-month high and have been outperforming gold with nearly 22 percent gains this year compared to 18 percent for gold, which has seen some profit taking recently.

"With a pause in this run in non-dollar currencies we should see some consumer demand (in gold) coming back. Obviously, India you have the big Hindu festival of Akshay Tritiya coming up early next month and we are into the wedding season with this slightly easier prices consumer demand will come in and help support," Ash says.

Ash says in the speculative trading markets like Comex Futures & Options, there is strong betting that silver prices will inch up further. He, however, would not expect silver to cross USD 17 per ounce for now.Below is the verbatim transcript of Adrian Ash’s interview with Manisha Gupta on CNBC-TV18.Q: What’s your sense on the kind of run-up that we have seen in precious metals?A: 2016 has started very, very strongly for gold and silver only just caught up, what you are actually seeing right now is the sudden upturn in interest from money managers particularly western fund managers that has actually tailed up a little bit the heat is coming out of that in physical market. If you look at the big western ETFs, the largest one the Standard & Poor's Depositary Receipt (SPDR) listed in New York that has actually lost a little mettle over the last few weeks now having grown at the fastest pace since the depths of the financial crisis in 2009, so little bit of the heat is coming out there however, what you were seeing in Futures & Options in the speculative trading market particularly in silver is very, very strong betting that prices will continue to go higher. I think we may be bit extended with some of these speculative bets right now, but the underlying picture look solid.Q: So what your sense, do you see these gains continue, do you see the gold prices now crossing USD 1,300, silver perhaps moving to USD 18-19 ounce kind of a level there.A: Well, I think USD 17 in silver is enough for now the prices has moved so quickly. Silver when it moves it’s just move so fast and what you are seeing right now in the Comex Futures & Options is a lot of hedge funds playing silver. They run to the bullish side, they will run equally faster to the bearish side when prices fall, but what you are seeing underlying is with gold at the moment this week really is about the Dollar the rise in prices that we have seen over the last two-three days that’s really about the US Dollar actually. If you look at gold priced in other currencies you look at priced in the Rupee particularly if you look at it priced in the Australian Dollar or Canadian Loonie in commodity producing currencies it has come down very sharply. The Australian gold price is now at 10 percent below February’s near record high. So what that means for the outlook for gold mining is that again a bit of the extra production which will have come through so far this year because of high Australian and Canadian gold prices that may ease back a little bit now we are going to get Q1 earnings results from the big majors next week. Again with lower prices or with a pause in this run in non-Dollar currencies we should also see some consumer demand coming back obviously India you have the big Hindu festival of Akshay Tritiya coming up early next month and we are into the wedding season with this slightly easier prices consumer demand will come in and help support.