Although many of the people’s expectations may not have been met in the budget presented last week, the budget has been wonderful for gold buyers. The price of gold has fallen tremendously following the announcement of reduction in customs duty in the budget. Now the domestic prices have become so low that people will not need to buy gold from Dubai. After the budget decision to reduce import duty on gold to 6 percent, gold prices are continuously falling.
Since the budget, gold prices have fallen by Rs 6,000 per ten grams. Experts believe that following the government’s decision, there will be transparency in the industry. Moreover, the general public will also benefit. But will gold prices continue to fall? What is the opinion of experts?
How much cheaper has gold become compared to Dubai?
The Economic Times report quoted Indian jewellers doing business in the UAE as saying that the cut in customs duty will reduce the desire of Indian buyers to buy gold from Dubai. It says that the narrowing gap between taxes on gold at home and abroad and the fall in the price of gold in the country after the budget will make a difference. This will curb the tendency to buy gold from abroad, especially from Dubai.
Rajiv Pople, director of Pople & Sons, is quoted in the ET report as saying, “Customs duty in India has been reduced to 6 per cent, while 5 per cent VAT is charged in Dubai on the purchase of gold.” In such a situation, a difference of 1 per cent remains, which can be offset by the labour cost. The labour cost is quite low in India. With hallmarking and HUID number becoming mandatory in India, concerns raised over the purity of gold in the country have been removed.
What do the experts say?
According to Anuj Gupta, Head of Currency and Commodities at HDFC Securities, there is less chance of gold prices going up or down further as we are in the expiry season in August and on the other hand, the Federal Reserve meeting is going to be held in America. The impact on gold prices can be seen only after this meeting. During this period, gold prices can remain between 67,000 and 69,000.
Decrease in global demand
On the one hand, India is the second largest gold consuming country in the world and due to cheap gold, gold shops in India are packed with buyers. On the other hand, the World Gold Council report has made some great revelations about the demand for gold. According to a recent report by the World Gold Council, the June quarter has seen a decline in the demand for gold in India. The demand for gold in the June quarter declined by 5 per cent to 149.7 tonnes. The reason for the decline in the demand for gold in the country is due to high prices. Gold prices had reached a record high during the June quarter. For this reason, WGC says that India is expected to purchase the least amount of gold this year.
What are the current gold prices?
This week, there are fluctuations in gold and silver prices. Volatility was also seen in gold prices in the commodity market on Tuesday (July 30), but metals were seen in the green. Gold on MCX (Multi-Commodity Exchange) had fallen today after opening with a slight increase, but later rose by around Rs 80 and was quoted at Rs 68,354 per 10 grams. It closed at Rs 68,268 yesterday.
