The price of this precious metal had touched a record high of 56,200 per 10 gram last year in August. From then on, the Gold price seems to drop continuously day by day. Right now the gold price in India is settled at Rs 48,510. Also, keep in mind that Gold rates in India include 10.75% import duty and 3%GST. If you observe the market and are aware of the Indian economy, you might know that the factors that have brought the price of gold metal to the lowest level.
Gold is always considered one of the most sought-after assets all over the world. It’s well known for its investment value and its use in jewelry making. Because of this, the gold price has seen significant growth over the years.
However, Due to the COVID-19 crisis and lockdowns, retail gold demand in India dropped significantly over the last 9 months. To cope with this, last week several dealers in India have offered the highest discounts in nearly nine months. But as the coronavirus cases continue to decline several states have already started the unlocking process. So there is a high chance that retail gold is expected to pick up gradually.
Factors that have influenced the Gold price drop
One of the reasons behind the gold price drop is the government’s decision to impose agricultural and infrastructure development tax on gold imports. Making the overall tax levy 10 percent. “This could be the reason behind gold price downfall,” said Indian Bullion and Jewellers Association National Secretary CA Surendra Mehta.
Dollar price increment
Based on stats the dollar index increased 0.03% against its rivals. Which made gold more expensive for holders of other currencies. Along with this, US treasury secretary Janet Yellen informed President Joe Biden’s $4 trillion spending plan. And US optimistic manufacturing data in the country. All this indicates the slide in the gold price.
Indian economy getting better
Based on the last few trading sessions, the Indian rupee has been gaining against the dollar significantly. It has recovered by 0.63 percent in the last month. Generally, the gold price tends to drop whenever the rupee value increases. Because the US dollar to buy gold from abroad is lower. Mehta stated “recent rise in the rupee value has lowered the prices of gold by 700-800 rupees per 10 gram.
ETF flow
SPDR Gold Trust is the world’s largest gold-backed exchange-traded fund. Stated that its holding decreased 0.6 percent. This means it came from 1,043.16 tonnes to 1,037.33 tonnes.
Investors are showing interest in Stocks
Last year Many investors moved to gold as stock markets crashed on a gloomy economic outlook. Because of the coronavirus outbreak. Along with this, the lockdowns led to an increase in gold prices globally. However, decrease in infected cases, an opening up of economies, and an increase in vaccination pace. The stock markets are regaining their old appeal. In addition to this, the lower interest rates also encourage investors to put their money in the stock markets.
Final thoughts
All these are the major reasons behind the price drop of gold. And the increase in vaccination pace and the opening up of economies have decreased the appeal of the yellow metal, as per analysts. According to analysts every dip in the gold price offers a buying opportunity. And if you observe the economy and actions against covid, Gold prices are expected to rise gradually.
