Bringing cheer to retail buyers, experts said gold prices may fall to Rs 25,000 per 10 grams by July on the back of bearish international sentiment towards the yellow metal and a rising rupee.
From Rs 30,300 per 10 grams at the beginning of May it has fallen over 10% to about Rs 27,000. In the Mumbai bullion market on Wednesday, standard gold (99.5% purity) fell Rs 30 to Rs 26,770 per 10 grams while pure gold (99.9% purity) was down Rs 35 to Rs 26,915 per 10 grams. In Delhi, however, standard gold prices appreciated Rs 40 to Rs 27,240 per 10 grams.
Gold traders are pinning their hopes on the Narendra Modi government bringing down the import duty to 6% from 10% within a few weeks, thus, leading to a further fall in prices.
Any further appreciation of the rupee against the dollar will also lower the domestic price of gold by making imports cheaper in rupee terms.
“When the price falls to Rs 25,000 (per 10 grams), retail buyers will return to jewellery shops,” said CP Krishnan, whole time director, Geojit Comtrade, a leading commodities trading firm.
Kumar Jain, owner of Umedmal Tilokchand Zaveri, a Mumbai-based jeweller who runs eight showrooms, said his sales have increased 20% after the price correction beginning in May.
International gold prices have been falling over the past few months as investors, buoyed by signs of a recovery in the US and Europe, move from bullion to equities and currency markets. Since the beginning of May, gold prices have fallen from $1,315 per ounce to $1,244 per ounce on Wednesday in New York.