New Delhi: Gold prices peaked at Rs 74,730 per 10 gm in the middle of July. Finance Minister Nirmala Sitharaman on on July 23, 2024, slashed the import duty on gold, driving down the yellow metal’s prices to Rs 67,400 per 10 gm a few days ago. But where will gold prices go from here?
Fluctuation around November
“The dip in prices is attributable to the government intervention. We usually see gold prices rising in August. Subsequently, prices drop a bit around Durga Puja and Dhanteras giving a bit of respite to the consumers,” said Joydeep Sirkar, director, B Sirkar Johuree, a century-old jeweller in Kolkata.
“But this year there is some uncertainty on a global scale due to the impending US presidential election. So around November there might be some fluctuation in the gold prices,” added Sirkar.
Buyers swarm jewellery stores
Hours after the Budget, Senco Gold & Diamonds MD Suvankar Sen said there may be an about 10 per cent surge in gold jewellery purchases after the import duty cut announced in Budget 2024. Some experts anticipate a rise in lingering hopes of an interest rate cut by the US Fed, softness in the US dollar index, global geopolitical tensions and, last but not least, a boost in demand for the metal in domestic markets.
Weak indicators, strong buying
Anuj Gupta, head of Commodity and Currency at HDFC Securities, said the reduction in customs duty on gold and silver, led to strong selling in India. This was on account of domestic markets adjusting to the new effective rate of 6 per cent, down from 15 per cent earlier.
The global indicators for gold price were also weak with sluggish demand for physical gold in Chinese markets, added Gupta. As a result, gold prices in India plunged 9 per cent and nosedived nearly 4.5 per cent in global markets in comparison to the high registered on July 17, 2024, said Gupta.
To be sure, value buying in gold for three straight sessions is “expected to provide some relief to the RBI as sharp correction in gold prices are expected to fuel gold imports,” he added,
How gold duty cuts may impact forex reserves
Amit Goel, co-Founder and chief global strategist at Pace 360, said, “Increased gold imports could lead to a higher outflow of foreign currency (dollars) since Gold is priced internationally in dollars. If the volume of imports rises substantially, it might strain the country’s foreign exchange reserves and affect the rupee.”
Gold prices have dipped after hitting a peak in July due to government intervention in the Budget. It has led to a surge in buying in the domestic markets and before the wedding season later in the year. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
