Gold has traditionally been considered as a secure investment vehicle in India, with people buying more of the precious metal during festivals and gifting it on weddings and other occasions. When demonetisation forced people to queue up outside banks to exchange old Rs 1,000 and Rs 500 notes for Rs 2,000 notes, a lot of Indians rushed to convert cash into gold.
Although the withdrawal of Rs 2,000 notes from circulation was seen as a similar move, the demand for gold hasn't surged like it did during demonetisation.
Better implementation prevented panic buying
According to an NDTV report, the Indian Bullion and Jewellers Association has stated that the demand isn't as high as 2016, since notes are being phased out slowly this time.
As people have four months to replace Rs 2,000 notes, the association also dismissed reports claiming that people are paying a premium on top of gold prices to buy jewellery.
They said that gold prices are already high at Rs 60,000 for 10 grams this time, which is double in comparison to Rs 30,000 during demonetisation.
It was business as usual at major gold markets in Mumbai and Delhi, as a rise of Rs 485 in prices and the note withdrawal announcement had little impact on demand.
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