prices have tumbled in a little over a month from $1,300 an ounce to $1,167.
While the Trump victory in America and certainty of the US Federal reserve raising rates next week has initially triggered a fall, a sharper slide was initiated because of India’s decision to demonetise high-value currency
on one side and China
import curbs on the other. The two countries together consumer over half the gold
produced in the world.
At Zaveri Bazar
here, standard gold
closed on Thursday at Rs 430 per 10g lower, at Rs
28,345 per 10, the lowest since April. Silver closed Rs
755 lower at Rs
40,710 a kg, the lowest since June.
A lot of demand
is to park unaccounted wealth; for now, 'unofficial import' demand
isn't there from this country. Reports from China
indicated they were considering an import quota to restrict gold
imports. Both developments put huge downward pressure on prices. Experts don’t see a floor or are able to predict prices. In India, for now, gold
has disappeared with the shortage of liquidity; the public has prioritised its spending, confining to essentials.
After the demonetisation
announcement on November 8, there was huge demand
in the following days. In the first nine days, 60-65 tonne was imported worth $2 billion. However, demand
has dried since. “It has reduced to 10-15 per cent of normal demand
during the post-Diwali marriage season. Buying is happening by bank transfer or, in some cases, on credit to known customers. We don’t see demand
returning in the near future. 2016 has been a washed out year for gold,” said Saurabh Gadgil, chairman, PNG Jewellers.
Zaveri Bazar's earlier daily trade of Rs 100-125 crore has reduced to Rs 14-15 crore. Tanya Rastogi, director of the Lucknow-based and 160-year-old Lala Jugal Kishore Jewellers, said: “Business is slower than before, as there just ain't enough cash to go around and usually trickles last to luxuries. Wedding
has been seen and some are selling jewellery on credit for such urgent needs.” Within the demand
already seen, she says, the credit card payment ratio versus cash has dramatically broadened.
The government has exempted branded gold
coins, made and marketed by MMTC and having an embossed Ashok Chakra, from excise duty.