CHAPTER III

TREND OF GOLD PRICE

III. I. Introduction

Gold is the safest investment for the masses, and people here believe that
buying gold on a particular day will usher prosperity into their lives. Most of the
people are very sure that their interest in gold would never wane, and would in fact
be expecting higher returns for their investment. For instance, in 2010 during
Akshaya Tritiya, gold was sold at $1,236 an ounce at the international level and in
2011 it jumped by 25 per cent to $1,544 an ounce. At the current period, this is a
fabulous return on gold investments. People should allocate at least 15-20 per cent
of their portfolio to buy of gold.For people in smaller cities and towns with a
significant dependence on agriculture, investing in gold is the simplest way to
possess liquidity in funds. India is one of the key markets for gold in the world and
a record import of 963 tonnes was made in 2010. This is a clear indicator of the fact
that gold buying has not seen a dip in the country, and has in fact cut across the
various income brackets, according to the World Gold Council. Another important
indicator is the staggering of gold purchases, timed to coincide with different
festivals in the country, with Akshaya Tritiya being the most favoured. South India
is the largest and biggest market for gold and gold jewellery in India. The South
India market accounts for more than 45 per cent of the total gold demand in India
which is 600 tonnes per year1. This trend, shows that it is always better to buy gold
in small tranches at different points of time, and prices in the end can be averaged
out. For the more matured investor, the option of Exchange Traded Funds (ETF) is
fast catching up. The gold rate in the market depends on the demand and
availability of the metal. The gold price has become unpredictable but those in
commodities market seem to have a better grip on the gold price.

The World Gold Council (WGC) and other industry officials said that
India's gold demand is likely to pick up in the second half of 2014 as curbs on
bullion imports are expected to be eased by the country's new Bharatiya Janata
Party Government. According to an industry estimate, gold imports by India, the
world's number two bullion consumer after China, could double from current levels

38
if the restrictions are eased. This would help global prices that slumped 28 percent
last year the first drop in 13 years partly due to India's curbs. Struggling with a
ballooning trade deficit, during 2013, India imposed a record high duty of 10
percent on overseas purchases of gold, the second-biggest expense in its import bill,
and introduced a rule tying import quantities to export levels. Indian gold imports
plunged by a fifth last year though jewellery and investment demand raised by 13
percent. The gap between supply and demand was sent premiums in the country to
$100 an ounce above the global benchmark, causing a spurt in smuggling. Gold
demand in India fell by a fourth to 190.3 tonnes in the quarter ending March 2014
due to the curbs, the quarterly report, which also noted that demand in top buyer
China fell from the previous year's record levels. Our current expectation is that any
policy review would allow monthly gold imports of an average of 50-60 tonnes a
month and a reduction in import duty as well. Imports have been running at an
average of 24.69 tonnes since July 2013, compared to an average of 78 tonnes
before the then government started making adjustments. According to
Somasundaram PR, WGC's head of Indian operations, said that India continues to
hold 900-1,000 tonnes of annual demand in India as it is expected to pick up in the
second half.2

During 1920 price of eight gram ornament gold was Rs. 21; it increased to
Rs.58 during 1954, further the ornament gold price increased to Rs. 86 during 1960.
During 1961, the ornament gold price increased to Rs. 104; it further increased to
Rs. 150 in 1969. At the same time the ornament gold price further increased to Rs.6
only during the periods of 1970 and 1971. But the ornament gold price increased to
Rs.200 during 1972 from Rs.156 during 1971. The ornament gold price rapidly
increased to Rs.392 during the periods of 1973 and 1974. During 1975 the
ornament gold price touched Rs.408 and it further increased to Rs.424 and Rs.488,
during 1976 and 1977 respectively. The spurt in ornament gold price reached
Rs.602 and Rs.996 during 1978 and 1979 respectively. The increasing trend in
ornament gold price touched four digit figure of Rs. 1,136 during 1980. After 1980,
the ornament gold price started its steep increasing attitude, because during 1981
the ornament gold price was Rs. 1,304 and it was further increased to Rs. 1,342, Rs.
1,368 during 1982 and 1983 respectively. During 1984 the ornament gold price was

39
 Rs.1,544 and Rs.1,652 during 1986. During 1987 the ornament gold price reached
Rs.2,016, but during 1988,1989 and 1990 the ornament gold price was around
Rs.2,624, whereas during 1991 the ornament gold price increased to Rs.3,472 and it
further increased to Rs.3,552, Rs.3,584 and Rs.3,824 during 1992, 1994 and 1995
respectively. Finally the ornament gold price stagnated at the price of Rs.4,000
during 1996. The increasing attitude of ornament gold price started to decrease,
during 1997 the eight gram ornament gold price decreased to Rs.3,400 and slight by
upward to Rs. 3,424 during 1999 and slightly downward to Rs.3,320 during 2000.
After 2001 the ornament gold price started its increased price pattern from Rs.3,368
and reached Rs.3,392, Rs.4,152, Rs.4,696 and Rs.6,144 during 2002, 2003, 2005
and 2006 respectively. The increased ornament gold price pattern of Rs.1,000
tremendously changed to Rs.4,000, because during 2008 the ornament gold price
increased to Rs.10,320; further it increased to Rs. 13,864, Rs.15,640, Rs.21,984 and
finally reached Rs.24,424 during 2009,2010,2011 and 2012 respectively. During
2013, eight gram ornament gold price was Rs.29,394 and its increased percentage
was 20. During 2014, eight gram ornament gold price decreased to Rs. 28,520 and
its decreased percentage was 3. The following table shows the gold price movement
history for the last 86 years.

Table III.I.1: Price Performance of Average Eight Gram Ornament Gold - 1920 to
2014
Year Price of Increase/ Year Price of Increase/ Year Price of Increase/
Ornament Decrease Ornament Decrease Ornament Decrease
Gold (Rs) (%) Gold (Rs) (%) Gold (Rs) (%)

1920 21 - 1981 1,304 +15 1999 3,424 +0.7

1954 58 +176 1982 1,342 +3 2000 3,320 -3
1960 86 +48 1983 1,368 +2 2001 3,368 +1
1961 104 +21 1984 1,454 +6 2002 3,392 +0.7
1969 150 +44 1985 1,544 +6 2003 4,152 +22
1971 156 +4 1986 1,652 +7 2005 4,696 +13
1972 200 +28 1987 2,016 +22 2006 6,144 +31
1974 392 +96 1990 2,624 +30 2008 10,320 +68
1975 408 +4 1991 3,472 +32 2009 13,864 +34
1976 424 +4 1992 3,552 +2 2010 15,640 +13
1977 488 +15 1994 3,584 +0.9 2011 21,984 +40
1978 602 +23 1995 3,824 +7 2012 24,424 +11
1979 996 +65 1996 4,000 +5 2013 29,394 +20
1980 1,136 +14 1997 3,400 -15 2014 28,520 -3
Source: The Hindu, Daily Thanthi, Nanayam vikadan, Economic Times, The Week

40
During the thirty four years period from 1920 to 1954, the ornament gold price
increased by 176 per cent. During six years period from 1954 to 1960, the price of
ornament gold increased by 48 per cent. During first decade period from 1961 to
1971, the ornament gold price increased by 50 per cent. During the second decade
period from 1972 to 1982 the ornament gold price increased by 571 per cent. The
third decade started from 1982 to 1992, and during that period the ornament gold
price increased by 165 per cent. The fifth decade from 1992 to 2002, the ornament
gold price started from increased volume and ended with decreased volume of 4 per
cent. During the last decade starting from 2002 to 2012 the ornament gold price
increased to the extreme range of 620 per cent. From 2012 to 2014 the ornament
gold price decreased by 17 per cent. After 1960, the increased percentage of
ornament gold price was as follows: during 1969 (44), 1974 (96), 1979 (65), 1991
(32), 2008 (68) and 2011 (40). After 1960, the percentage of increase in ornament
gold price was during 1971 (4), 1975 (4), 1982 (3) and 1992 (2) and the percentage
of decreased price was: during 1997 (15), 2000 (3) and 2014 (3). The gold price
annual changes in percentage in different countries’ currencies as on May 2014 are
given below:

41
 Table III.I.2 : Gold Price Annual Change Per cent as on May 06, 2014

Year United States Australian Canadian Swiss Franc Chinese Yuan Euro Rates British Pound Indian rupee Japanese yen
Dollar Rates Dollar Rates Dollar Rates Rates Rates Rates Rates Rates
(%) +/- (%) +/- (%) +/- (%) +/- (%) +/- (%) +/- (%) +/- (%) +/- (%) +/-
2005 20.0 - 28.9 - 15.4 - 37.8 - 21.3 - 36.7 - 33.0 - 24.2 - 37.6 -
2006 23.0 15 12.6 -56 23.0 49 14.2 -62 18.7 -12 10.6 -71 8.3 -75 20.8 -14 24.4 -35
2007 30.9 34 18.3 45 12.1 -47 21.7 53 23.3 24 18.4 73 29.2 251 16.5 -21 22.9 -6
2008 5.6 -82 31.3 71 30.1 149 -0.1 -99 -2.4 -110 10.5 -43 43.2 48 28.8 74 -14.4 -163
2009 23.4 318 -3.0 -109 5.9 -80 20.1 20,200 23.6 1083 20.7 97 12.7 -71 19.3 -33 26.8 286
2010 27.1 16 13.3 543 21.3 261 15.4 -23 22.8 -3 37.1 79 31.4 147 22.3 15 11.4 -57
2011 10.1 -63 10.2 -23 13.5 -37 11.2 -27 5.9 -74 14.2 -62 10.5 -66 31.1 39 4.5 -60
2012 7.0 -31 5.4 -47 4.3 -68 4.2 -62.5 6.2 5 4.9 -65 2.2 -79 10.3 -67 20.7 360
2013 -28.3 -504 -16.2 -400 -23.0 -635 -30.1 -817 -30.2 -587 -31.2 -737 -29.4 -1436 -18.7 -281 -12.8 -162
2014 8.8 131 3.6 122 11.6 150 6.6 122 12.1 140 7.4 124 6.2 121 5.3 128 4.9 138
12.8 - 10.4 - 11.4 - 10.1 - 10.1 - 12.9 - 14.7 16.0 - 12.6 -

Source: Portal.indiainfoline.com/ gold-price-annual-change.

42
 During the ten year period from 2005 to 2014, the annual changes percentage
of gold price against US dollar was 20 per cent during 2005 and it increased to 15, 34
percent till it reduced to 82 percent during 2008. From 2011 onwards the annual
changes percentage started to decreased and the highest reduced percentage was 504
during 2013. The gold price annual changes percentage against US dollar was reduced
by 4 times during the ten year period. The gold price annual changes percentage against
Australian dollar was reduced by five times during the period of ten years. The
maximum changes in percentage reduced 400 percent during 2013. Against Canadian
dollar, the changes percentage reduced five times during the period, particularly during
2013, the changes percentage reduced a maximum of 635 percent. In case of Swiss
Franc rates, annual changes percentage reduced six times during the ten year period.
During 2009, the changes percentage highly increased to 20,200 percent. The
maximum changes in percentage were when it reduced to 817 percent during 2013.
Against Chinese Yuan rates, the changes percentage reduced five times and during
2009 the changes in percentage highly decreased to 587 percent. The gold price annual
changes percentage against Euro rates reduced five times during the period and the
maximum reduced percentage was 737 percent during 2009. Against British Pound
rates, the changes percentage reduced five times and the highest change in percentage
was 1,436 percent during 2009. The annual changes in gold price against Indian rupee
reduced five times during the period and the highest reduced change in percentage was
281 during 2009. Against Japanese yen, the change in percentage reduced six times
during the period and highest reduced change in percentage was 163 percent during
2008.

III.II. The Trend of Ornamental Gold Price for the span of Eight years from
2005 to 2012
The ornamental gold price fluctuates frequently every week, every month
and every year due to various economic statuses and buyers’ perception about gold.
The month wise fluctuation for the span of 8 years from 2005 to 2012 is presented
below. For the purpose the researcher took one gram ornamental gold price from
January to December every year. The following table independently indicates the
one gram ornamental gold price movements for all the years separately. The

43
trend values are also calculated with respect to the base month which is previous
month.

Methodology: for the purpose of calculating average ornamental gold price

the researcher has taken gold price per gram every month which was collected
from Nanayam Vigadan Tamil leading financial magazine for every year and
average it.

Table III.II.1: Per Gram Average Ornamental Gold Price in the year -2005

Month Per Gram Average Increase or

Ornamental Gold Price (Rs) Decrease (%)
January 465 -
February 498 7.09
March 556 11.64
April 576 3.59
May 566 1.73
June 573 1.23
July 566 -1.22
August 584 3.18
September 606 3.76
October 637 5.11
November 664 4.23
December 706 6.32

During 2005, from January to December, per gram average ornamental

gold price decreased by 1.22 per cent during the month of July only and during
the remaining 11 months the price was in bullish trend. During the first six
months from January to June the price increased by 23 per cent and
during remaining six months, from July to December, the price increased by
25 percent. During the overall 12 months from January to December, the price
increased by 52 per cent. The price increase was high by 11.64 per cent during the
month of March. During the 12 months period, per gram ornamental gold price was
journeyed in bullish trend. The movement of price trend has been given in the chart
form.

44
 Chart III.II.1: Per Gram Average Ornamental Gold Price in the year -2005

800
700
600
500
400
300
200
100
0
Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

Table III.II.2: Per Gram Average Ornamental Gold Price in the year -2006

Month Per Gram Average Ornamental Increa e or

Gold Price (Rs) Decrease (%)
January 738 -
February 750 1.62
March 744 -0.80
April 835 12.23
May 931 11.49
June 840 -9.77
July 896 6.66
August 896 6.66
September 847 -5.46
October 818 -3.42
November 858 4.88
December 856 -0.23

During 2006, per gram average ornamental gold price was increased by 4
per cent from the previous year. During the period per gram average ornamental
gold price decreased by 0.80 per cent, 9.77 per cent, 5.46 per cent, 3.42 per cent,
and 0.23 per cent during the months of March, June, September, October and
December respectively and during the remaining seven months the price was in
bullish trend. During the first six months from January to June the price increased
by 14 per cent and during the remaining six months from July to December the
price decreased by 4 percent. During the overall 12 months period from January to

45
December, the price increased 16 per cent. The price increase was very high by
12.23 per cent during the month of April and it decreased by 9.77 per cent during
the month of June. During the 12 months period, per gram ornamental gold price
was journeyed in the zigzag trend.

Chart III.II.2: Per Gram Average Ornamental Gold Price in the year -2006

1000
900
800
700
600
500
400
300
200
100
0
Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

Table III.II.3: Per Gram Average Ornamental Gold Price in the year -2007
Month Per Gram Average Increase r
Ornamental Gold Price (Rs) Decrease (%)
January 845 -
February 885 4.73
March 870 -1.69
April 868 -0.22
May 827 -4.72
June 810 -2.05
July 813 0.37
August 821 0.98
September 863 5.11
October 901 4.40
November 954 5.88
December 955 0.10

During 2007, per gram average ornamental gold price was decreased by 1
per cent from previous year. The average ornamental gold price per gram was
decreased by 1.69, 0.22, 4.72, and 2.05 per cent during March, April, May and June
respectively. And during the remaining nine months the price trend was in the

46
upward trend. During the first six months, price decreased by 4 per cent during the
remaining six months price increased by 17 per cent. The overall price increased
during the period was 13 per cent. The price increase was high by 5.88 per cent
during the month of November and it highly decreased by 4.72 per cent during the
month of May. During the period, the ornamental gold price journey started from
bearish trend and ended with bullish trend.

Chart III.II.3: Per Gram Average Ornamental Gold Price in the year -2007

1000

950

900

850

800

750

700
Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

Table III.II.4: Per Gram Average Ornamental Gold Price in the year - 2008
Month Per Gram Average Increase or
Ornamental Gold Price (Rs) Decrease (%)
January 1043 -
February 1099 5.36
March 1166 6.09
April 1098 -5.83
May 1127 2.64
June 1147 1.77
July 1208 5.31
August 1102 -8.77
September 1127 2.26
October 1181 4.79
November 1129 -4.40
December 1160 2.74

During 2008, per gram average ornamental gold price was increased by 9 per
cent from previous year. The per gram average ornamental gold price came to four
digits and per gram average ornamental gold price decreased in the months of April,
August and November by 5.83, 8.77 and 4.40 per cent respectively. During the

47
remaining nine months period the price was in bullish trend. During the first six
month from January to June the price increased by 10 per cent and during the
remaining six months from July to December the price decreased by 4 percent.
During the overall 12 months from January to December, the price increased
by 11 per cent. The price increase was high by 6.09 per cent during the month
of March and it decreased by 8.77 per cent during the month of August. During
the 12 months period, per gram ornamental gold price was journeyed in the zigzag
trend.

Chart III.II.4: Per Gram Average Ornamental Gold Price in the year -2008

1250

1200

1150

1100

1050

1000

950
Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

Table III.II.5: Per Gram Average Ornamental Gold Price in the year - 2009
Month Per Gram Average Ornamental Increase or Decre se (%)
Gold Price (Rs)
January 1248 -
February 1371 9.85
March 1419 3.50
April 1353 -4.65
May 1357 0.29
June 1361 0.29
July 1368 0.51
August 1350 -1.31
September 1459 8.07
October 1478 1.30
November 1600 8.25
December 1601 0.06
During 2009, per gram average ornamental gold price was increased by 7
per cent from previous year. The per gram average ornamental gold price decreased

48
by 4.65 and 1.31 per cent, during the months of April and August respectively and
during the remaining ten months the price raise was in bullish trend. During the first
six month the price increased by 9 per cent and during the remaining six months the
price increased by 17 percent. During the overall 12 months from January to
December, the price increased by 28 per cent. The price increase was high by 9.85
per cent during the month of February and it decreased by 4.65 per cent during the
month of April. During the 12 months period, per gram ornamental gold price was
journeyed in the bullish trend.

Chart III.II.5: Per Gram Average Ornamental Gold Price in the year -2009
1800
1600
1400
1200
1000
800
600
400
200
0
Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

Table III.II.6: Per Gram Average Ornamental Gold Price in the year - 2010
Month Per Gram Average Ornamental Increase or
Gold Price (Rs) Decrease (%)
January 1559 -
February 1547 -0.76
March 1550 0.19
April 1557 0.45
May 1677 7.70
June 1748 4.23
July 1709 -2.23
August 1725 0.93
September 1781 3.24
October 1813 1.79
November 1874 3.36
December 1914 2.13
During 2010, per gram average ornamental gold price was decreased by 3
per cent from previous year. The per gram average ornamental gold price decreased

49
by 0.76 and 2.23 per cent, during the months of February and July respectively and
during the remaining ten months the price increase was in bullish trend. During the
first six month the price increased by 12 per cent and during the remaining six
months the price increased by 12 percent. During the overall 12 months from
January to December, the price increased by 23 per cent. The price increase was
high by 7.70 per cent during the month of May and it highly decreased by 2.23 per
cent during the month of July. During the 12 months period, per gram ornamental
gold price was journeyed in the bullish trend.

Chart III.II.6: Per Gram Average Ornamental Gold Price in the year -2010
2500

2000

1500

1000

500

0
Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

Table III.II.7: Per Gram Average Ornamental Gold Price in the year – 2011
Month er Gram Average Ornamental Increas or
Gold Price (Rs) Decrease (%)
January 1889 -
February 1899 0.52
March 1947 2.52
April 2000 2.72
May 2075 3.75
June 2101 1.25
July 2139 1.80
August 2455 14.77
September 2731 11.24
October 2790 2.16
November 2826 1.29
December 2868 1.48
During 2011, per gram average ornamental gold price was decreased by 1
per cent from previous year. There was no jerk in per gram average ornamental
gold price. During the first six month the price increased by 11 per cent and during

50
the remaining six months the price increased by 34 percent. During the overall 12
months from January to December, the price increased by 52 per cent. During the
month of August per gram average ornamental gold price highly increased by 14.77
per cent. The price highly increased by 14.77 per cent during the month of August.
During the 12 months period, per gram ornamental gold price was journeyed in the
perfect bullish trend.

Chart III.II.7: Per Gram Average Ornamental Gold Price in the year -2011
3500

3000

2500

2000

1500

1000

500

0
Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

Table III.II.8: Per Gram Average Ornamental Gold Price in the year – 2012
Month Per Gram Average Ornamental Increase or
Gold Price (Rs) Decrease (%)
January 2599 -
February 2564 -1.34
March 2289 -10.72
April 2420 5,72
May 2720 12.39
June 2815 3.49
July 2867 1.84
August 2842 -0.87
September 2887 1.58
October 3007 4.15
November 2772 -7.81
December 2873 3.64
During 2012, per gram average ornamental gold price was increased
by 9 per cent from previous year. The per gram average ornamental gold
price decreased by 1.34 per cent, 10.72 per cent, 0.87 per cent and 7.81 per cent
during the months of February, March, August and November respectively

51
and during the remaining eight months period the price raise was in bullish
trend. During the first six months from January to June the price increased by
8 per cent and during the remaining six months from July to December the
price increased by 0.2 percent. During the overall 12 months from January to
December, the price increased by 10 per cent. The price raise was very high by
12.39 per cent during the month of May and it highly decreased by 10.72 per cent
during the month of March. During the 12 months period, per gram ornamental
gold price was journeyed in beginning of two months by bearish trend and after that
bullish trend.

Chart III.II.8: Per Gram Average Ornamental Gold Price in the year -2012

3500

3000

2500

2000

1500

1000

500

0
Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec

52
Table III.II.9: Month and Year wise Average Ornamental Gold Price Movements - 2005 to 2012

2005 2006 +/- 2007 +/- 2008 +/- 2009 +/- 2010 +/- 2011 +/- 2012 +/- Month +/-
(Rs) (Rs) % (Rs) % (Rs) % (Rs) % (Rs) % (Rs) % (Rs) %- (Rs) %
Jan 465 738 59 845 14 1043 23 1248 20 1559 25 1889 21 2599 37 1298 28
Feb 498 750 51 885 18 1099 24 1371 25 1547 13 1899 23 2564 35 1326 27
Mar 556 744 34 870 17 1166 34 1419 22 1550 9 1947 26 2289 17 1317 23
Apl 576 835 45 868 4 1098 26 1353 23 1557 15 2000 28 2420 21 1338 23
May 566 931 64 827 -11 1127 36 1357 20 1677 23 2075 24 2720 31 1410 27
Jun 573 840 46 810 -3 1147 42 1361 19 1748 28 2101 20 2815 34 1424 26
Jul 566 896 58 813 -9 1208 48 1368 13 1709 25 2139 25 2867 34 1445 28
Aug 584 896 53 821 -8 1102 34 1350 22 1725 28 2455 42 2842 16 1471 27
Sep 606 847 40 863 2 1127 30 1459 29 1781 22 2731 53 2887 6 1537 26
Oct 637 818 28 901 10 1181 31 1478 25 1813 23 2790 54 3007 8 1578 25
Nov 664 858 29 954 11 1129 18 1600 42 1874 17 2826 51 2772 2 1584 24
Dec 706 856 21 955 12 1160 21 1601 38 1914 19 2868 50 2873 0.1 1616 23
Year 583 834 44 868 5 1132 30 1413 25 1704 20 2310 35 2721 20 1445 25

53
 Year Wise Analysis: From the analysis of the ornamental gold price
movements from 2005 onwards it is found that there was a continuous hike in the
average ornamental gold price per gram and this shows that there was a steady
increase in the price from 2005-2012. During 2005 to 2007, the average ornamental
gold price increased 49 per cent whereas from 2007 to 2010 the average ornamental
gold price increased by 96 per cent and from 2010 to 2012 the price further
increased by 60 per cent. The overall percentage of price increase from 2005 to
2012 was 367. The maximum price increase was by 35 per cent during 2011.
During 2005 to 2006, the price increased by 44 per cent followed by 5 per cent
during 2006 to 2007, 30 per cent during 2007 to 2008, 25 per cent during 2008 to
2009, 20 per cent during 2009 to 2010, 35 per cent during 2010 to 2011 and 20 per
cent during 2011 to 2012. During the eight years period the average price of one
gram ornamental gold was Rs.1,445 and its movement was in bullish trend.

Chart III.II.9: Per Gram Average Ornamental Gold Price in Year-Wise- 2005-2012

3000

2500

2000

1500

1000

500

0
2005 2006 2007 2008 2009 2010 2011 2012

Month Wise Analysis: During the month of January in 2005 and 2006 the
price increased by 59 (highest) per cent and it was followed by 14 (lowest) per cent
during 2006 and 2007, 23 per cent during 2007 and 2008, 20 per cent during 2008
and 2009, 25 per cent during 2009 and 2010, 21 per cent during 2010 and 2011 and
37 per cent during 2011 and 2012. The average price during the month of January
was Rs.1,298 and average increase in percentage was 28.

54
 During the month of February in 2005 and 2006 the price increased by 51
(highest) per cent and it was followed by 18 per cent during in 2006 and 2007, 24
per cent in 2007 and 2008, 25 per cent in 2008 and 2009, 13 (lowest) per cent in
2009 and 2010, 23 per cent in 2010 and 2011 and 35 per cent in 2011 and 2012.
The average price increase during the months of February was Rs.1,326 and it
increased by 2 per cent from previous months average ornamental gold price.
During the months increase in average price was 27 per cent.

During the month of March in 2005 and 2006 the price increased by 34
(highest) per cent and it was followed by 17 per cent in 2006 and 2007, 34 (highest)
per cent in 2007 and 2008, 22 per cent in 2008 and 2009, 9 (lowest) per cent in
2009 and 2010, 26 per cent in 2010 and 2011 and 17 per cent in 2011 and 2012.
The average price during the months of March was Rs.1,317 and it decreased by 0.7
per cent from previous months average ornamental gold price. During the months
the increased average price per cent was 23.

During the month of April in 2005 and 2006 the price increased by 45
(highest) per cent and it was followed by 4 (lowest) per cent in 2006 and 2007, 26
per cent in 2007 and 2008, 23 per cent in 2008 and 2009, 15 per cent in 2009 and
2010, 28 per cent in 2010 and 2011 and 21 per cent in 2011 and 2012. The average
price during the months of April was Rs.1,338 and it increased by 1.6 per cent
from previous month’s average ornamental gold price. During the months the
increased average price per cent was 23.

During the month of May in 2005 and 2006, the price increased by 64
(highest) per cent. In 2006 and 2007 the price fell to 11 per cent and increased by
36 per cent in 2007 and 2008 and it was followed, 20 per cent 2008 and 2009, 23
per cent in 2009 and 2010, 24 per cent in 2010 and 2011 and 31 per cent in 2011
and 2012. The average price during the months of May was Rs.1,410 and it
increased by 5 per cent from previous month’s average ornamental gold price.
During the months the increased average price per cent was 27.

During the month of June in 2005 and 2006, the price increased by 46
(highest) per cent. In 2006 and 2007 the price fell by 3 per cent and increased by 42

55
per cent in 2007 and 2008 and it was followed by 19 per cent in 2008 and 2009, 28
per cent in 2009 and 2010, 20 per cent in 2010 and 2011 and 34 per cent in 2011
and 2012. The average price during the months of June was Rs.1,424 and it
increased by 1 per cent from previous months average ornamental gold price.
During the months the increased average price per cent was 26.

During the month of July in 2005 and 2006, the price increased by 58
(highest) per cent. In 2006 and 2007 the price fell to 9 per cent and increased by 48
per cent in 2007 and 2008 and was followed by 13 per cent in 2008 and 2009, 25
per cent in 2009 and 2010, 25 per cent in 2010 and 2011 and 34 per cent in 2011
and 2012. The average price during the months of July was Rs.1,445 and it
increased by 1.5 per cent from previous month’s average ornamental gold price.
During the months the increased average price per cent was 28.

During the month of August in 2005 and 2006, the price increased by 53
(highest) per cent. In 2006 and 2007 the price fell by 8 per cent and increased by 34
per cent in 2007 and 2008 and was followed by 22 per cent in 2008 and 2009, 28
per cent in 2009 and 2010, 42 per cent in 2010 and 2011 and 16 per cent in 2011
and 2012. The average price during the months of August was Rs.1,471 and it
increased by 1.8 per cent from previous month’s average ornamental gold price.
During the months the increased average price per cent was 27.

During the month of September in 2005 and 2006 the price increased by 40
per cent and it was followed by 2 (lowest) per cent in 2006 and 2007, 30 per cent in
2007 and 2008, 29 per cent in 2008 and 2009, 22 per cent in 2009 and 2010, 53
(highest) per cent in 2010 and 2011 and 6 per cent in 2011 and 2012. The average
price during the months of September was Rs.1,537 and it increased by 4 per cent
from previous months average ornamental gold price. During the months the
increased average price per cent was 26.

During the month of October in 2005 and 2006 the price increased by 28 per
cent and it was followed by 10 per cent in 2006 and 2007, 31 per cent in 2007 and
2008, 25 per cent in 2008 and 2009, 23 per cent in 2009 and 2010, 54 (highest) per
cent in 2010 and 2011 and 8 (lowest) per cent in 2011 and 2012. The average price

56
during the months of October was Rs.1,578 and it increased by 3 per cent from
previous month’s average ornamental gold price. During the months increased
average price per cent was 25.

During the month of November in 2005 and 2006 the price increased by 29
per cent and was followed by 11 per cent in 2006 and 2007, 18 per cent in 2007 and
2008, 42 per cent in 2008 and 2009, 17 per cent in 2009 and 2010, 51 (highest) per
cent in 2010 and 2011 and 2 (lowest) per cent in 2011 and 2012. The average price
during the months of November was Rs.1,584 and it increased by 0.4 per cent from
previous months average ornamental gold price. During the months increased
average price per cent was 24.

During the month of December in 2005 and 2006 the price increased by 21
per cent and was followed by 12 per cent in 2006 and 2007, 21 per cent in 2007 and
2008, 38 per cent in 2008 and 2009, 19 per cent in 2009 and 2010, 50 (highest) per
cent in 2010 and 2011 and 0.1 (lowest) per cent in 2011 and 2012. The average
price during the months of December was Rs.1,616 and it increased by 2 per cent
from previous months average ornamental gold price. During the months increased
average price per cent was 23. From every year January to December, the price
increased by 25 per cent and it moved in bullish trend.

Chart III.II.10: Per Gram Average Ornamental Gold Price in Month- Wise-
2005-2012

1800
1600
1400
1200
1000
800
600
400
200
0
Jan Feb Mar Apl May Jun Jul Aug Sep Oct Nov Dec

57
III. III Analysis of Gold Price Trend

The next stage in the research process is the identification of the significant
difference in the ornamental gold price movements during the study period. The
researcher has found out that the analysis of ornamental gold price movements, year
as well as month wise, has not helped to find out to what extent the ornamental gold
price movements have associated or deviated from price movements in every
quarter of the study periods. Hence the researcher formulated the hypothesis to find
out the significant difference between first, second, third and fourth quarter with
respect to the average ornamental gold price movements.

H0: There is no significant difference between first and second, second and third
and third and fourth quarter with respect to ornamental gold price movement.

Table III.III.1: Difference among the Ornamental Gold Price movements - 2005

Year Quarter N Mean Std. Std. Error t- value Sig.

Deviation Mean (2-Tailed)
1 3 506 46.06 26.59 -2.44 0.13
2 3 571 5.13 2.96
2005 2 3 571 5.13 2.96 -2.72 0.08
3 3 585 20.03 11.56
3 3 585 20.03 11.56 -4.88 0.01
4 3 669 34.77 20.07

Result: t-value for third and fourth quarters is -4.881 statistically significant
at 5 percent level. It indicates that there is significant difference in the
ornamental gold price movement in the third and fourth quarter of the year 2005.
The mean wise comparison indicates that the average ornamental gold price of third
and fourth quarter was 585 and 669 respectively. There is no significant difference
in the ornamental gold price in the remaining quarters. It indicates that the
ornamental gold purchase demand was constant in first and second quarter and
second and third quarter, whereas in third and fourth quarter, the demand was not
constant one.

58
Table III.III.2: Difference among the Ornamental Gold Price movements -
2006
Year Quarter N Mean Std. Std. Error t- value Sig.
Deviation Mean (2-Tailed)
1 3 744 6 3.4641 -2.441 0.132
2 3 868 54.04011 31.20007
2006 2 3 868 54.04011 31.20007 -0.312 0.775
3 3 879 28.29016 16.33333
3 3 879 28.29016 16.33333 1.708 0.166
4 3 844 22.53886 13.01281

Result: t-value for first and second, second and third and third and fourth quarter is
-2.441, -0.312, and 1.708 respectively and which are not statistically significant at 5
percent level. It indicates that there is no significant difference in the ornamental
gold price movement in all the quarters of the year 2006. It indicates that the
ornamental gold purchase demand was stable in all the quarters.

Table III.III.3: Difference among the Ornamental Gold Price movements - 2007

Year Quarter N Mean Std. Std. Error t- value Sig.

Deviation Mean (2-Tailed)
1 3 866 20.20726 11.66667 1.523 0.212
2 3 835 29.8161 17.21434
2007 2 3 835 29.8161 17.21434 0.115 0.914
3 3 832 26.85765 15.50627
3 3 832 26.85765 15.50627 -4.415 0.012
4 3 936 30.89229 17.83567

Result: t-value for third and fourth quarter -4.415 is statistically significant at 5
percent level. It indicates that there is significant difference in the ornamental gold
price movement. The mean wise comparison indicates that the ornamental gold
price in third and fourth quarter, 832 and 936 differ significantly. It indicates that
the ornamental gold purchase demand was constant in first and second quarter and
second and third quarter, whereas in third and fourth quarter, the demand was not
constant one.

59
Table III. III.4: Difference among the Ornamental Gold Price movements - 2008

Year Quarter N Mean Std. Std. Error t- value Sig.

Deviation Mean (2-Tailed)
1 3 1102 61.58192 35.55434 -557 0.627
2 3 1124 24.63737 14.22439
2008 2 3 1124 24.63737 14.22439 -0.619 0.583
3 3 1145 55.41059 31.99132
3 3 1145 55.41059 31.99132 -311 0.777
4 3 1156 26.15977 15.10335

Result: t-value for first and second quarter, second and third quarter and third and
fourth quarters -557, -0.619, and -311 are not statistically significant at 5 percent
level. It indicates that there is no significant difference in the ornamental gold price
movement in all the quarters of the year 2008. It shows that the demand for
ornamental gold during all quarters was same.

Table III.III.5: Difference among the Ornamental Gold Price movements - 2009

Year Quarter N Mean Std. Std. Error t- value Sig

Deviation Mean (2-Tailed)
1 3 1346 88.19864 50.92151 -216 0.849
2 3 1357 4 2.3094
2009 2 3 1357 4 2.3094 -1.045 0.405
3 3 1392 58.4323 33.7359
3 3 1392 58.4323 33.7359 -3.159 0.036
4 3 1559 70.72718 40.83435

Result: t-value of third and fourth quarter -3.159, 0.036 is statistically significant
at 5 percent level. It indicates that there was significant difference in the ornamental
gold price movement in third and fourth quarter in the year 2009. The mean
wise comparison indicates that the ornamental gold price, in third and fourth
quarter was 1392 and 1559 and they not differ significantly. It indicates that the
ornamental gold purchase demand was constant in first and second quarter and
second and third quarter. On the other hand, the demand was not uniform in third
and fourth quarter.

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Table III.III.6: Difference among the Ornamental Gold Price movements - 2010

Year Quarter N Mean Std. Std. Error t- value Sig

Deviation Mean (2-Tailed)
1 3 1552 6.245 3.60555 -1.946 0.19
2 3 1660 96.54187 55.73848
2010 2 3 1660 96.54187 55.73848 -1.297 0.298
3 3 1738 37.80653 21.82761
3 3 1738 37.80653 21.82761 -3.517 0.028
4 3 1867 50.86256 29.36551

Result: t-value for third and fourth quarter -3.517 is statistically significant at 5
percent level. It indicates that there was significant difference in the ornamental
gold price movement during third and fourth quarter of the year 2010. The mean
wise comparison indicates that the ornamental gold price in third and fourth quarter,
1738 and 1867, not differs significantly. It indicates that the demand for ornamental
gold purchase in the first and second, second and fourth quarter was stable whereas,
in the remaining third and fourth quarter the demand was not stable.

Table III.III.7: Difference among the Ornamental Gold Price movements - 2011

Year Quarter N Mean Std. Std. Error t- value Sig

Deviation Mean (2-Tailed)
1 3 1911 31.00538 17.90096 -4.179 0.021
2 3 2058 52.44362 30.27834
2011 2 3 2058 52.44362 30.27834 -2.205 0.151
3 3 2441 296.2251 171.0257
3 3 2441 296.2251 171.0257 -2.24 0.15
4 3 2828 39.03844 22.53886

Result: t-value for first and second quarter is - 4.179 and is statistically significant
at 5 percent level. It indicates that there was significant difference in the ornamental
gold price movement in first and second quarter of the year 2011. The mean wise
comparison indicates that the ornamental gold price in first and second quarters was
1911 and 2058, respectively. It indicates that the demand for ornamental gold
purchase in first and second quarter is not constant whereas, in second and third and
third and fourth quarter there was constant demand for the ornamental gold
purchase.

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Table III.III.8: Difference among the Ornamental Gold Price movements - 2012
Year Quarter N Mean Std. Std. Error t- value Sig
Deviation Mean (2-Tailed)
1 3 2484 169.7793 98.02211 -1.087 0.34
2 3 2651 206.1755 119.0355
2012 2 3 2651 206.1755 119.0355 -1.784 0.213
3 3 2865 22.54625 13.01708
3 3 2865 22.54625 13.01708 -0.269 0.811
4 3 2884 117.8855 68.06125

Result: t- value for first and second quarter, second and third quarter and third and
fourth quarter is -1.087, -1.784 and -0.269 respectively and they are not statistically
significant at 5 percent level. It indicates that there was a significant difference in
the ornamental gold price movement in all the quarters of the year 2012. It reveals
that demand for the ornamental gold was stable in all the quarters.

Over all glance: On the whole it can be concluded that there is a significant
difference among the price movement of ornamental gold in the years 2006, 2008
and 2012 but in the years 2005, 2007, 2009, and 2010, the third and fourth quarter
and in case of the year 2011 first and second quarters showed significant difference
among the price movement of ornamental gold. This shows that the bullish or
bearish trend of ornamental gold price was decided not only by the demand
increased by the buyers due to festivals, important social occasions and feel best
investment, but also by other external factors like overall demand of other countries
for gold, monetary policy and inflation status of the nation.

Table III.III.9: Volatility in Gold Price during the Period from 2005 to 2012

Year Number of Maximum

Volatility Number
2005 10 2
2006 6 6
2007 8 4
2008 8 4
2009 9 3
2010 9 3
2011 11 1
2012 7 5

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 From the above table the researcher concluded that in the year 2011 shows
the maximum fluctuation in 11 times in the gold price, followed by in the year
2005, 10 times, 2009 and 2010, 9 times, 2007 and 2008, 8 times, 2012, 7 times and
2006, 6 times. The fluctuation of gold price not only due to the fluctuation of dollar
and crude oil price and also the demand of ornamental gold in India.

After analyzing the year and month wise ornamental gold price movements,
the researcher has found the per gram average ornamental gold price during the
near future. The methodology to find out per gram average ornamental gold price in
2015 is given below:

Table III.III.10: Trend Line Equations and Future Projection of Per Gram
Ornamental Gold Prices - 2005-2012
Month Maximum Year Maximum Price Month
Price (Rs) Increased (%)
December 706 2005 11.64 March
May 931 2006 12.23 April
December 955 2007 5.88 November
July 1208 2008 6.09 March
December 1601 2009 9.85 February
December 1914 2010 7.70 May
December 2868 2011 14.77 August
October 3007 2012 12.39 May

From the above data the researcher intended to apply principles of least
square and regression analysis to identify the trend line equation. The application of
two regression analysis for the maximum price and maximum percentage
fluctuation revealed the following results.

Statistically Value Significant

R2 0.917 0.000
F 66.126 0.000
Co-efficient 345.976 - 693244.429

From the above table it is found that ‘R’ Square value is = 0.917 and ‘F’ value is
=66.126 which are statistically Significant at 5 percent level. This indicates that in
the year 2005-2012 gold price varied at 91.7 percent level, this leads to the
comparison of trend line equation:

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 Y = 345.976 * - 693244.429

This trend line equation can be used to project maximum expectation of gold prices
in future; similarly the maximum price fluctuation trend line equation is derived
from the following table

Statistical Value Significant

R2 0.057 0.569
F 0.364 0.569
Co-efficient 0.318 -627.618

In the case of maximum price fluctuation percent, it is found that the

variance the ‘R’ 5.7 percent and ‘F’ value 0.364 are not Statistically Significant at 5
percent level. This shows that on the average for the span of 8 years only 5.7
percent fluctuation is noticed. The trend line equation is given by, Y = 0.318 * -
627.618. That is in the year 2015 the price of the gold per gram can be estimated in
the following manner,

Y= 345.976 * (2015) – 693244.429

= 697141. 64 – 693244.429
= 3897.21

Therefore the projected average per gram ornamental gold price may be Rs. 3,897
in 2015 if the same internal and external factors will continue.

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Reference:

1. The Hindu, (May 4, 2011) Gold Prices to Remain Bullish, It is always better
to buy gold in small tranches at different points in time.
2. Siddesh Mayenkar and Ananthalakshmi A, Gold demand in India to rise,
Modi seen easing import curbs, Reuters India, May 20, 2014.

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