NEW DELHI / KOCHI: The sharp fall in stock market indices on Tuesday, fuelled by a global sell-off, had its impact on gold prices, boosting them to a 14-month high. Stock market volatility is usually accompanied by stronger gold prices since investors see gold as a safe asset.
Gold of 99.9 and 99.5 per cent purity rallied by Rs 330 each to Rs 31,600 and Rs 31,450 per 10 gram, a level last seen on November 9, 2016. The effect was felt in the retail market too. “Prices have been gradually increasing over the past few days, as people began making the shift from stocks to gold,” said B Govindan, state president of the All Kerala Gold and Silver Merchants Association. “The Long Term Capital Gain Tax at 10 per cent proposed in the Union Budget would have also influenced this trend. We expect the price to go up in coming days, too.” Industry experts also expect the international prices to continue to hike up domestic gold rates.
The large influx of investors seeking safe haven assets also resulted in an uptick in silver demand. Combined with increased industrial offtake, Silver regained the Rs 40,000 per kg mark in the bullion market on Tuesday, surging by Rs 500.
The gold market in India has been boosted by relatively low prices through the last year, with demand rising 9 per cent to 727 tonnes, according to the World Gold Council. The WGC expects the 10 per cent import duty and impact of the 3 per cent GST on gold jewellery to keep demand between 700 and 800 tonnes during the current year.