The increase in import duty has made situations difficult for the jewelers. Jewelery has become expensive, not only because of increase in bullion prices but also due to increase in import duty. This increase has been passed on the the customer, which is why we have been experiencing a decline in demand even though the number of branches have increased.
Given that real interest rates are expected to remain negative for longer while concerns over currency debasement and inflationary pressures have resurfaced, the backdrop remains fertile for gold. However, gold still has hurdles to overcome, such as the further strengthening of the dollar, technical resistance levels and profit-taking.
Tensions between the West and Iran may be escalating and this could be bullish for gold prices, said HSBC in a research note.
At the Multi Commodity Exchange of India (MCX), precious metals and energies posted solid gains for the week Feb 06- Feb 10, 2012. Base metals weakened except for copper which rose over 1%. In India, Commodity Transaction Tax once again sparked debate as the FICCI and ASSOCHAM opposed the government's proposed move. Indian IIP numbers came out much weaker than expected, dampening investor confidence.
