Will gold prices fall any time soon? Trend on May 2 indicates different scenario

THIRUVANANTHAPURAM: The price of gold has increased by Rs 560 per sovereign with the current price at Rs 53,000. The price of one gram of gold rose to Rs 6,883. The price of one sovereign of gold was Rs 52,440 on Wednesday. The price of one sovereign of gold crossed Rs 50,000 at the beginning of April.

There has been no major change in silver prices. The price of one gram of silver is Rs 87 and the price of one kilogram of silver is Rs 86,500.

At the same time, the Reserve Bank is buying gold in large quantities as part of diversifying its foreign exchange reserves. RBI bought 19 tonnes of gold in the three months from January to March. There is an increase of 16 tonnes in gold reserves compared to last year. The Reserve Bank of India has been raising gold reserves to meet any emergency as inflation continues to soar.

Fluctuations in the value of the dollar against major world currencies also add to gold's popularity. In the week ending on April 5, the country's total foreign exchange reserves reached an all-time high of $64,850 crore. The World Gold Council said that the huge jump in prices will bring the country's gold consumption to the lowest level in four years. Last year, India's gold consumption fell by 1.7 percent to 761 tonnes. There has been a 13 percent increase in gold prices so far this year.

While there is growing interest in gold as an investment, there is not much enthusiasm for buying it as jewellery. According to the World Gold Council, India's gold consumption rose by eight percent to 136.6 tons in the three months from January to March. It is estimated that gold consumption in India this year will be 700 to 800 tons. A price increase may decrease consumption.