Rupee Rally Sends Gold Prices Plummeting
The recent rupee rally has led to a decline in gold prices in India, making it cheaper for consumers. The Indian rupee has appreciated by 1% against the US dollar, reaching 94.49 on Friday from 95.35 on August 26. This appreciation has resulted in a decrease in the value of dollar-denominated gold, making it less expensive for Indians to purchase.
The spot gold prices have fallen by ₹7,270 per 10 grams or 4% in the last eight trading sessions to ₹1,54,884 on Friday from ₹162,154 logged on August 26. Domestic silver prices have also dipped 4% or ₹9,935 per kg to ₹2,35,456 on Friday from ₹2,45,391 logged on August 24.
Prithviraj Kothari, President of the India Bullion and Jewellers Association, said that many consumers prefer to wait rather than buy gold during periods of uncertainty, leading to a bunching of purchases around perceived dips. He added that a steadier or stronger rupee softens the domestic price of gold somewhat.
Rajesh Rokde, Chairman of the All India Gem and Jewellery Domestic Council, said that the fall in gold prices should help gold demand during the upcoming festive season. Aarav Bafna, Director of Akoirah by Augmont, stated that volatile gold prices are making festive demand more selective rather than smaller in value.