Even though gold prices in India fell about 10% from last month’s highs, physical retail demand remained below normal, forcing dealers to offer discounts. Gold prices in India fell for the third day in a row on Friday, settling at ₹50 690 per 10 grams. From August 7 to the high of ₹56,200 gold is down about ₹5,500 per 10 grams or about 10%.
Dealers have offered discounts of up to $ 40 an ounce off official domestic prices this week, Reuters reported, down from $ 43 last week, a five-month high.
Gold rates in India include 12.5% import duty and 3% GST.
Retail demand for physical gold rose only slightly in India this week amid lower domestic prices as the coronavirus crisis sapped consumer morale.
Analysts believe gold prices should remain supported at lower levels in the hope of more fiscal stimulus and trade tensions between the United States and China. Despite the recent price correction, gold prices in India have risen by around 30% this year, helped by easy monetary policy from central banks, demand for safe haven and the depreciation of the rupee.
US Federal Reserve Chairman Jerome Powell said on Friday that while August’s US unemployment data for August was positive, the recovery in the economy from the coronavirus pandemic had a long way to go and interest rates will remain low for a long time.
Powell’s comments came after the latest data showed the U.S. labor market extended its rebound for a fourth month in August, as the unemployment rate fell almost 2 percentage points to 8.4%. The much better-than-expected improvement in the unemployment rate affected demographic groups, while wage gains of $ 1.37 million were widespread across all industries. (With contributions from the agency)