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Gold loses appeal in India

Gold as investment has lost sheen in India. The data for past few months clearly suggest that gold as an investment has lost customer confidence. Physical gold demand has declined sharply. Outflow from gold Exchange Traded Funds (ETFs) has accelerated. With hopes of economic recovery on cards, stock markets are on fire. Money is seen flowing to stock market. Gold, having declined almost 16% in the past three months, is not considered as preferred investment, any more.
The international gold prices have been on a decline for the past several months. The domestic gold prices in India too have fallen sharply. From the peak of Rs. 35,074 per ten grams a year ago, it had been a steady journey downwards. It touched lows of Rs 26,900 per ten grams in June this year. Currently, the yellow metal trades at Rs 27,450 per 10 grams. The strengthening US dollar and weakening overseas demand for gold jewellery has badly affected the gold demand in the country.
The investment in gold Exchange Traded Funds (ETFs) have witnessed huge outflow during the past several months. The total number of portfolios has seen a deep cut of almost 20% since May ’13. The number of portfolios that touched a high of 605,000 during May last year has reduced to as low as 480,000 as on day.

Analysts see further drop of nearly 13% in the country’s gold demand in 2014. They fear that gold’s appeal as an investment tool is likely to deteriorate further, unless international gold prices stage a strong rebound in the forthcoming months of the year.

Source:Scrap Monster

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