Gold losing ground, new wage code, and World Bank’s optimism: Three things Teji Mandi investors should know on March 31, 2021
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Worst quarter for Gold in four years:

Gold prices in India have been declining since hitting a record high of Rs 56,200 in March. The precious metal was trading at Rs 43,500 for 10 grams of 22-carat gold on March 31. For 24-carat gold, the rate is Rs 47,450.

Gold has declined more than 3% so far this month and 11.4% during the quarter. It makes the March quarter the worst for gold since 2016.

Gold is on track for its biggest quarterly drop in over four years. Gold prices are expected to sink further with elevated U.S. Treasury yields and a rising dollar.

In March, the dollar index is at its peak in nearly five months and it is on track for its best month since November 2016. The U.S. 10-year Treasury yields also held close to a 14-month peak hit to register monthly gain for the fourth consecutive month.

Be ready for tweaked salary structure:

India Inc is gearing up for the new wage regime from April 1 onwards. Under its impact, most employees are likely to see changes in their salary components and pay structure.

As per the new wage code passed last year, there will be changes in the salary components like take-home salary, provident fund, and gratuity etc. It will impact the overall take-home salaries.

Starting April 1, the basic pay component will have to be 50% or more in total salary. Due to this new rule, employees with higher allowance components are set to take most of the hit. Allowances sometimes make up as much as 80% of compensation for high-earning employees.

Provident Fund contribution is also going to rise for both- workers and companies. And, companies will also have to brace for the increased cost of gratuity as basic pay goes up.

Growth momentum remains on track:

The World Bank has revised its forecast of India’s FY22 growth to 10.1%, a 2x jump from 5.4% predicted in January.

WB believes India to grow at 7.5% in the worst-case scenario. It also acknowledged that rising covid cases have made it extremely difficult for policymakers to make the decisions.

While India's second wave posed a risk to derail the recovery, the world bank doesn't see a repeat of lockdown. It also added that economic recovery is likely to continue as the vaccination drive picks up pace. Focus on infrastructure is expected to aid growth momentum and revive domestic demand.

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