KOCHI : The butterfly effect of demonetisation is being felt on the yellow metal, in a much stronger manner. As jewellers keep fingers crossed over the drop in price of gold, it is unlikely that the metal’s price may find a large number of takers in the near future.
“Coupled with cash crunch, there is a fear of a possible restrictions on gold holdings among people in the country. Though the recent fall in the prices could be attributed to global factors, in India domestic factors are weighing on the yellow metal. The purchasing power is too low and customers are skeptical about government policy on gold. The situation now is that sales dropped by at least 40 per cent in the past three weeks,” said Ramesh S Pai, Partner, A Geeri Pai Jewellers.
Interestingly, gold imports jumped to around 100 tonnes in November. But with a sharp cash crunch, it is estimated that gold imports would fall well below 50 tonnes in December.
Experts point out that the expectation of a possible surge in demand during the wedding season is bleak as of now, owing to currency woes.
“Scrapping of large denomination notes adversely affected the sector. Unlike in the past, the buying spree at lower price
levels is not being witnessed now,” said B Girirajan, managing partner, Bhima Group, adding that it will take time (longer than expected) to witness an increase in price and sales.
Gold drops
Gold prices has dropped the second day by H350 to hit a six-month low of H29,000 per 10 grams. Globally, gold fell 1.25 per cent to $1,173 an ounce in New York .