Experts attribute global, Indian economic meltdown for rise in gold rate

Chennai: In the last three months, the price of gold has grown multifold. While the rate of one sovereign standard gold stood at Rs 26,752 in the end of July, today it is Rs 30,024.

Experts opine that it is due to the economic meltdown witnessed in India and across the global markets. “The slump in economic condition is major contributing factor that has led to such a glaring situation. In India, there is depression in share market, real estate and the tax is also hiked,” Madras Jewels and Diamond Merchants’ Association general secretary, S Shanthakumar tells News Today.

“The unemployment rate has increased in India and since the other fields are not performing well, major investors have directed their interest towards gold due to which the price is growing with every passing day,” Shanthakumar adds.
Topping the bag of reasons is the depreciation of currency value across the world, according to the experts.

Shanthakumar states that the advent of online trade is also one of the reasons. “The situation is extremely dynamic as the changes occur in split seconds. Whereas, in the past, the rate grew by a rupee or two,” he concurs.

Sharing similar thoughts, Kamesh Balaji S of Classic Diamonds in the city, cites the trade war between the US and China. “The gold and silver price is expected to grow at least for the next few days and the values in share market would go deep down in about eight months,” he says.

It has hit the middle class and underprivileged communities in Chennai as the price has crossed Rs 30,000. “All the major jewellers are witnessing loss,” Kamesh says.

“The capital price has gone beyond the roof and we would have to invest 20 per cent more than required to purchase fresh gold stock,” Shanthakumar says.

Asked about stability in price, he says, “The correction would occur when the other sectors are strengthened which would gradually pull the investors. Another possibility is the change in economic structure in India. In the global scenario, if any country decides to sell the precious metal asset in a bid to stabilise the economy, the gold prices may come down.”

 Experts unanimously state that this is the right time to invest in gold and not in share market