Gold, the yellow metal that has a very great power of pulling people, remains one of the good options for investment. Yet with its rising prices it too has reached a high platform that the common man could not easily reach. It was a similar lack of demand in the face of high prices that led to gold prices dropping from the record high in March to Rs 11,110 per 10gm by the end of April. So why are analysts so confident that the story wont be repeated?
Thats because of the combined effect of a rise in dollar prices of gold and the rise in the rupee value of the dollor itself. On May 1, the international price of gold was $853 per ounce. More than a month later, on June 13, it was only slightly higher at $866 per ounce. A change barely 1.5%. But in rupee terms prices had changed by 7.7% from Rs 11,104 per 10gm on May 1 to Rs 11,958 per 10gm on june 13. This was mainly because the rupee was depreciated by around 5.2% during the intervention period. The standard method of fixing domestic gold prices is to convert the dollor price into rupees and then add Rs 100 per 10gm for custom duty.
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