Gold price plunged Rs 600 to Rs 34,870 per ten gram in the bullion market on Tuesday, continuing to be under pressure for the last three trading sessions.
Gold price plunged Rs 600 to Rs 34,870 per ten gram in the bullion market on Tuesday, continuing to be under pressure for the last three trading sessions. Gold prices had surged immediately after the government increased customs duty on gold and other precious metals to 12.5 per cent in the Union Budget 2019 from earlier 10 per cent. According to analysts, there is a scope for further correction in the gold prices and the investors are in a wait and watch mode ahead of the US Federal Reserve minutes to be released later today.
After rallying around 8 per cent in June, gold prices came under pressure recently due to the stronger dollar index, positive equity indices and appreciation in rupee against the US dollar. According to the analysts, as there is no physical demand for the yellow metal in the market and the festive season is away by more than a month, investors should wait for some more time as there are no buyers of gold in the market at this point in time.
“The festive season will start after Aug 15 and the wedding season according to Hindu calendar will also start after October. Last week the US job data was quite impressive. So there are chances that there might be a hawkish stance in the US Fed minutes. If the rate cut happens then there would be pressure on the dollar because of which the gold prices may soar. In the last three trading sessions, the gold prices have not been able to go up which shows there are no buyers of gold,” Ajay Kedia, Director at Kedia Commodities told Financial Express Online who further said rather than going for physical gold, the investors can invest in sovereign gold bonds.
The domestic gold prices are currently trading in the lower range on account of steep fall in international gold prices in the last 2-3 trading sessions. As far as the impact of raising customs duty on gold is concerned, that may create a dent in the demand for the yellow metal in India, Amit Sajeja, Associate Vice President with Motilal Oswal Financial Services told Financial Express Online.