The urge to buy gold after the Government decided to scrap ₹500 and ₹1,000 currency notes on Tuesday seems to have tapered off. As a panic reaction over the government’s announcement late last night, people rushed to jewellery shops at Zaveri Bazaar, the main bullion market in Mumbai, to exchange their high value currency notes for jewellery.

MP Ahammed, Chairman, Malabar Gold and Diamonds, said a few jewellery shops in Mumbai were open till midnight on Tuesday due to heavy rush after the news (on currency withdrawal) broke.

However, he said, on Wednesday morning there was an overall slump in the sales across showrooms as expected.

“We had sold gold jewellery against cheque and credit cards for people buying for wedding,” he added.

Gold prices rose by ₹495 per 10 gram to ₹31,145 in Mumbai on Wednesday largely due to the unexpected US election results. In the international market, the yellow metal gained five per cent to $1,320 an ounce, the highest since Brexit.

Spot gold rose 4.9 per cent to $1337.40 an ounce amidst a slump in dollar slump. Trump victory remained a worrisome factor for risky assets such as global equities and supportive for the yellow metal.

Caution call

Sreedhar GV, Chairman, All India Gems and Jewellery Trade Federation, said the government move to scrap high value currency notes would impact the gems and jewellery trade though it will help the industry get more organised in the long run.

Saurabh Gadgil, Director, Indian Bullion and Jewellers Association and Chairman, PNG Jewellers, said the withdrawal of high value currency notes is a sequel to the Government’s fight against black money and corruption.

Like in any paradigm shift, there will be ambiguity in the market for a couple of months in terms of pricing, but the economy will emerge stronger and support jewellery demand, he said.

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