MUMBAI: According to the World Gold Council, a rise in gold prices to an all-time high in India is discouraging local purchasers ahead of what is typically a crucial demand period next month.
Last Monday, the price of 10 grammes of gold in the second-largest consumer reached a record high of 60,455 rupees ($734). Due to demand for safe havens and a declining rupee, the metal has increased by around 15% in India over the past year. Most of the gold used in the nation is imported, mostly from Switzerland and the United Arab Emirates.
According to PR Somasundaram, regional chief executive officer for India at the council with headquarters in London, “people prefer to wait and watch, and they want to make sure that this is not a hiccup and that prices would continue to grow.” Demand may return for the important shopping holiday of Akshaya Tritiya in April if prices remain at their current levels, but further volatility will make people stay away, he said in an interview with Bloomberg Television.
When there are significant celebrations like Diwali, “they will probably wait for the monsoons and the fourth quarter,” he said. As prices climb more, there will be less demand because the stock markets have become somewhat more attractive for long-term investors, he noted.
Smuggling is becoming more appealing due to both high import taxes and record local costs. In the wake of Covid, “we can plainly see that the cash market is at a discount therefore activity has grown enormously,” said Somasundaram.