Even as demand for gold remains stagnant in India, the world's largest bullion consumer, due to the ongoing strike by jewellers, prices of the yellow metal are likely to appreciate.
The caveat: the rise would be over the long term — over a period of one year. So, for those looking to make a quick buck, disappointment will be in store, say analysts.
"Due to a weak rupee, gold prices will increase and fetch good returns for investors. Also China, European countries and the US are likely to continue buying gold, which will increase demand," said Hitesh Jain, commodity analyst with India Infoline (IIFL).
While demand from China and European countries will be fuelled by investment of their foreign exchange reserves in the precious metal, US will buy gold as a hedge against rising crude oil prices, Jain added.
Industry experts say prices would remain stable for few months and would not increase or decrease sharply. Moreover, while the supply of gold may have been impacted due to the jewellers' strike, demand for the precious metal has not been impacted much. The metal also saw substantial trading on the Multi Commodity Exchange (MCX).
"The retail investor should take a medium- to long-term view while buying gold," said Jain. The prices for October futures at the MCX were quoting at Rs 29,451 per 10 gm on Wednesday, down by about 0.5%.
{{/usCountry}}"The retail investor should take a medium- to long-term view while buying gold," said Jain. The prices for October futures at the MCX were quoting at Rs 29,451 per 10 gm on Wednesday, down by about 0.5%.
{{/usCountry}}The Budget raised the import duty on gold to 4% from 2%. The custom duty on standard gold bars, gold coins and platinum of more than 99.5% purity would now attract 4% duty instead of 2% earlier.