Rupee's Rise Makes Gold Cheaper for Consumers
The recent appreciation of the rupee against the dollar has led to a sharp drop in gold prices, making it cheaper for consumers. Spot gold prices have fallen by ₹7,270 per 10 grams, or four percent in the last eight trading sessions, down from ₹162,154 on August 26 to ₹1,54,884 on Friday.
The rupee has appreciated against the dollar by one percent to 94.49 on Friday compared to 95.35 on August 26, following a $127 billion mop-up through FCNR deposit. This appreciation makes gold cheaper in rupee terms as a large part of India's gold is imported and priced based on USD-INR conversion.
Domestic silver prices have also dipped four percent 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 consumers prefer to wait rather than buy gold during periods of uncertainty, leading to bunching of purchases around perceived dips.
However, experts believe that a steady or stronger rupee could soften the domestic price of gold, offering some relief to jewellery buyers. Rajesh Rokde, Chairman of the All India Gem and Jewellery Domestic Council, said that the fall in gold prices may help demand during the upcoming festive season, with the industry encouraging responsible consumption.