FCNR-led rupee rally makes gold cheaper, weighs on prices

The rupee's sharp appreciation against the dollar, driven largely by a $127 billion $FCNR deposit, has made gold significantly cheaper for Indian consumers. Spot gold prices have plummeted by 4% to ₹1,54,884 per 10 grams, down from ₹162,154 just eight sessions ago. The rupee's gain against the dollar has also resulted in a 4% drop in domestic silver prices, from ₹2,45,391 to ₹2,35,456 per kg.

Prithviraj Kothari, President of the India Bullion and Jewellers Association, noted that consumers are often hesitant to purchase gold during periods of uncertainty, leading to increased buying when dips are observed. A steadier or stronger rupee, however, could help alleviate the burden of higher global gold prices for domestic buyers.

Rajesh Rokde, Chairman of the All India Gem and Jewellery Domestic Council, believes the price drop should aid gold demand ahead of the upcoming festive season. Even though gold prices may remain volatile, consumers continue to prioritize gold for weddings, festivals, and as a means of long-term wealth and security.