Consumer demand traditionally remains low in March as people rush to make last-minute tax-saving investments. However, with less than two weeks to go for general elections, some black money parked overseas is said to be entering India in the form of gold.
M P Ahammed, chairman, Malabar Gold & Diamonds, said: “It’s quite obvious that bullion is coming into the country in a roundabout way.” He explains roundabout way as illegal import.
Globally, institutional investors have started reducing long positions while the dollar is strengthening. Also, the uncertainty over Brexit has resulted in the pound falling against the dollar. A strong dollar leads to a fall in gold prices.
Tanya Rastogi, director of Lucknow-based Lala Jugal Kishore Jewellers, feels the fall is a “natural correction after the unnatural spike in the metal”.
Between January and 20 February, gold prices
in Mumbai went up by around Rs 2,200 per 10 gram, after which the prices fell sharply. From December, the jump was over 10 per cent in less than three months.
Rastogi said, “Falling prices however have not helped demand yet. The fluctuation in gold prices usually never supports the sale of gold, it makes the consumer watchful. It converts into demand once the rates settle.”