Ahmedabad: A slowdown in global economy and escalating US-China trade tensions have pushed up the price of yellow metal up nearly 20 per cent so far this year.
Besides, the spectre of a no-deal Brexit has led investors to safe-haven assets like gold and silver. In Indian markets, the price of gold has breached the Rs 40,000 mark (per 10 grammes) while silver rose to Rs 49,050 per kg.
As a result, the demand for precious metals has reduced. "Only investors who want to book profits later are buying gold now. In fact, the customers are selling gold or recycling old jewellery to make new ornaments," said Dipak Choksi, a showroom owner here.
Jinai Choksi, another jeweller from Surat, said merchants are not buying gold as of now as international prices are not stable. "The demand has reduced due to high prices. Only families with wedding celebrations are opting to buy gold," he said.
Traders say that gold buying by many central banks across the globe has also supported the prices as financial institutions seek to diversify their holdings. The yellow metal is considered as a financial instrument that does not erode in valuation during periods of economic turbulence.
The prices of yellow metal scaled a fresh six-year high earlier this week as the latest tit-for-tat trade tariffs by the United States and China battered global equities and boosted demand for safe-haven assets.
Spot gold jumped 0.9 per cent to 1,539.70 dollars per ounce.India is one of the largest consumers of gold, buying 760.4 tonnes in 2018, according to data compiled by the World Gold Council.
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