The price of gold has tanked more than 5.2 per cent so far after Union Finance Minister Nirmala Sitharaman slashed customs duty on the yellow metal during her Budget presentation. The Centre's move was aimed at lowering input costs, curb smuggling and push exports.
This has chipped away the gains of 14.7 per cent jump in yellow metal price since the year began, with investors losing around Rs 11 lakh crore on July 23 alone. Compared to this, the 30-stock BSE benchmark index Sensex rallied only 11 per cent year-to-date.
On July 22, 24 karat gold was pegged at Rs 72,140 per 10 grams in New Delhi while on the following day when the Budget was tabled the yellow metal tumbled to Rs 69,250 per 10 grams. It was down to Rs 67,460 on Friday, bring it near March-end levels. On March 28, the price of 24 karat gold was Rs 67,090.
In the international market, the prospects of a US Fed interest rate cut in September has led investors to book profits, bring gold prices down further. This is because gold is an attractive investment when the interest rates are low.
With prices slumping, there is high demand for gold jewellery ahead of the upcoming wedding season. Customers are flocking to jewellery shops to reap the benefits of the price dip.
Going by these factors, the sharp dip in gold prices is a buying opportunity for long-term investors.
