The sudden surge in gold prices to near-record levels is scaring some Indian buyers. Buyers who are delaying purchases and alarming jewellers in the country’s busiest bazaars.
On March 15, gold prices in international markets plummeted to their lowest level in almost a week. US Treasury yields surged ahead of the Federal Reserve’s expected rate hike. The and optimism for progress in the Russia-Ukraine talks weakened the metal’s safe-haven allure.
Fluctuating Gold Today Prices
On the Multi-Commodity Exchange (MCX), gold contracts were down 0.79 per cent at Rs 51,893 per kilogram at 9.31 a.m. The silver prices were down 0.86 per cent at Rs 68,255 per gram.
Following Russia’s invasion of Ukraine, prices in India, the world’s second-largest consumer after China, have risen in pace with global markets. It rose throughout the last month as investors sought safe-havens. Almost all the gold consumed in India is imported, and costs are growing as the Indian currency trades near a record low.
“Buyers have become very watchful of the price movement. It is only when a price level has been supported for a while will they return,” said Tanya Rastogi, director at Lucknow-based Lala Jugal Kishore Jewellers. Sales at her company have dropped 25 per cent in the past two weeks. It is as the rally scuppered wedding-related jewellery purchases, and investment demand has slowed to a “dull crawl.”
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According to Rastogi, buyers are continually calling in to check on daily prices. Also, many are inquiring if the present dip will continue or if the upswing will return. Despite geopolitical and inflationary concerns, the precious metal remains the “go-to haven asset.” Also consumers will return in the run-up to Akshaya Tritiya. It is an auspicious day for Hindus to buy gold.
Gold Purchase in India
The bulk of gold consumption in India comes in jewellery. The recent drop in price of gold and purchases contrasts with the global trend, which has seen buyers store coins and bars. However, as fears of a pandemic subsided, sales improved after two years of decline. As a result, India’s gold imports nearly doubled in 2021. It reached their highest level in a decade, according to the World Gold Council.
“Demand for jewellery was strong in the first two months of 2022,” said Ashish Pethe, head of the All India Gem and Jewellery Domestic Council. “However, March has been slow due to pricing fluctuations.” “People are avoiding the area and adopting a wait-and-see attitude. People are waiting on the sidelines because stable prices are the best thing for demand.”
Since surging to a high of 55,558 rupees ($725) per 10 grammes last week, benchmark gold futures and gold prices in India have lost about 7% of their value. It fell just short of a record set in August 2020. On Tuesday at 2:25 p.m. local time, they traded at 51,867 rupees. Still, costs are above buyers’ comfort levels. The demand may only pick up in April, just in time for several events, according to Pethe.
Ahammed M.P., chairman of Kerala-based Malabar Gold & Diamonds, says high prices have harmed near-term demand for gold jewellery during the current wedding season. Some buyers can absorb the rise and continue to their pre-determined plans. However, “several families with limited funds are altering their spending rather than delaying the marriage,” a report says.
Gold prices dropped on Wednesday as demand for haven assets waned. It was after Ukraine said it saw an opportunity for compromise in negotiations with Russia. However, despite Moscow’s increased bombing, it limited the price drop ahead of the Federal Reserve’s policy announcement later in the day.
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