Gold prices fell for a fourth consecutive day Thursday to a four-year low of Rs 24,980 per 10 gm in the Indian bullion market, breaching the psychologically important mark Rs 25,000 just as we are about to enter the festival and wedding season.
However, the Hindu calendar has fewer auspicious days for weddings this year. That may work against the traditional rally that gold prices tend to stage once the summer is over.
Experts attribute the sustained fall to the fact that inflation is under control, denting gold’s appeal as a safe haven. What’s more, interest rates have not been cut. In fact, the global interest rate outlook points upwards, with the United States Federal Reserve, that country’s central bank, expected to increase rates in September. Gold does not pay interest, and therefore money flows out of it if there is scope of it earning good returns in interest-paying assets like bonds.
All these have combined to keep demand low not only by investors but also jewellers. Buyers are deferring purchases in the hope of a further decline in prices. According to reports, jewellers have been sending text messages to potential buyers offering to slash jewellery making charges by as much as half.