Ratheesh and Prema Nair have been planning to buy gold for their daughter’s wedding in September. But after seeing prices of the yellow metal fall by Rs. 800 per 10 grams last week, they have postponed their purchase.
“Our son who works with a broking firm tells us prices will fall further. So, we decided to wait,” said Prema Nair.
With the US economy firming up, gold is steadily losing its sheen as an asset class and buyers are hoping that prices will fall further. In fact, there’s no repeat of the buying frenzy seen in April with retailers adopting the wait-and-watch approach.
Gold prices ended at Rs. 26965 per 10 grams, up Rs. 80, in the Mumbai market on Tuesday.
“Buyers are waiting for a massive fall,” said Vijay Choksi, secretary, Mumbadevi Zaveri Bazar.
And it’s not just retail buyers. Investors are also adopting a cautious approach.
“I don’t want to buy gold ETF (exchange-traded fund). If I enter now, it will take a long time for me to get good returns,” said Rajat Shrivastava, an executive with a retail chain.
Anslysts, too, said it is too early to bet on the price rise.
“Nothing is positive for gold except rupee depreciation,” said Navin Mathur, commodity analyst with Angel Broking. “Had rupee been holding at Rs. 53-54 level, gold prices would have already been around Rs. 24,500-Rs 25,000. Rupee depreciation partially offsets the impact of decrease in gold price in international market.”
Meanwhile, the RBI on Tuesday tightened restrictions on gold lending for regional rural banks (RRBs) and said RRBs should not lend against gold jewellery, ornaments and coins weighing above 50 grams, a norm applicable for all other banks.