Gold prices in India may cross $550 (INR 30,000) per 10 grams during the June to August period, according to the Associated Chambers of Commerce and Industry of India (ASSOCHAM), Rapaport reported.
The price increase is expected due to a slowdown in inflows by foreign institutional investors (FIIs), rising inflation, rupee depreciation, growing signs of fatigue in the real estate sector and pent-up demand by jewelry manufacturers and traders in wake of India’s annual wedding and festive season, the industry body noted.
ASSOCHAM stated that India’s gold imports might also reach about 1,000 tonnes in the fiscal year that ends in March 2013, up from about 933 tonnes in 2012 and its price might touch $643 (INR35,000) per 10 grams by the turn of this year.
D.S. Rawat, ASSOCHAM’s secretary general said that lack of clarity on tax implications has led to massive slump in demand from FIIs, which has compelled investors to move out from capital and commodity markets and invest in bullion, both cash and exchange traded funds (ETFs), to hedge against inflation and still earn high yields.
“Besides, a weakening rupee against the dollar due to trade imbalance together with soaring current account deficit, slowing exports on account of falling growth in the U.S. and euro-zone and aforesaid reasons will lead to upwards trend of gold prices,” Rawat explained.
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