Gold Prices Fall To 5 Year Low; Good News For Indian Consumers

Gold prices plunged to a 5 year low as investors bet on the US Federal Reserve hiking interest rates in its Sept policy. Spot gold in the international market was down to $1,106 an ounce after falling as low $1,089, its lowest since March 2010.

The fall in international prices of gold is good news for Indian gold consumers, as domestic prices are expected to fall when jewellery shops open for trade.

Indian gold prices track international prices of gold and any drop in international markets leads to a swift drop in domestic prices.

Of course, this happens if there is no sharp depreciation in the price of the rupee against the dollar and at the moment one does not see the rupee falling significantly against the dollar, given our robust current account deficit.

22 Karat gold was last trading at around the 25,000 level mark in the Mumbai market and may fall further by 12 noon. Today's drop in prices of gold was also on account of strength in the dollar.

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Gold Futures on the MCX also hit the lowest level since June 2013 at Rs 25,007. Analysts expect a further dip in gold prices in the coming few months.

GoodReturns.in