NEW DELHI: It’s no news that Indians have a special affinity for the yellow metal. With sharp decline in gold prices to nearly 5 year lows, consumers and investors are tempted to accumulate the yellow metal due to this steep decline. On Saturday, gold price increased by Rs 350 regaining its physiological mark of Rs 25,000 per 10 gram largely on buying by jewellers despite weak trends in global markets.
According to the World Gold Council, “As prices have come down by around 10 per cent since January, consumers are viewing this as a buying opportunity.” The monsoon is supposed to be a dull season for jewellers. But, many gold merchants are witnessing a rise in footfalls in their showrooms with improvement in consumer sentiments. Pradeep Sen of Sen Jewellers says, “In the last couple of days, the sharp fall in rate has resulted in an improvement in footfalls at our stores. In this rather dull period, we hope attractive prices will draw more buyers.”
However, many analyst believes that prices will come down further as the economic recovery on the ground has not begun. India Ratings and Research (Ind-Ra) agency in its report maintained a negative outlook on domestic gold prices for FY 2015-16 and said rates are likely to decline to touch Rs 20,500 per 10 gram in India from the current levels if the US Federal Reserve effects a rate hike.“The agency believes movements in gold prices will largely depend on the US interest rate decision. In the event of a US rate hike, global gold prices could drop and range between US $900 an ounce to US $1,050 an ounce. As such, the domestic price of gold may decline and range between Rs 20,500-24,000 per 10 gram from the current levels of Rs 27,000,” the rating agency said.
However, WCG says that demand may have eased since the highs of 2013, but its growth trend is intact.