Gold demand to fall in India, says Rangarajan

Gold demand to fall in India, says RangarajanPrime Minister’s Economic Advisory Council (PMEAC) Chairman C Rangarajan has said that the expects the price of fold to fall in the Indian market as the falling inflation would make investment in financial instruments more attractive than investments in the shiny metal.

He also said that the steps taken by the authorities to curb the gold demand would help in reducing the current account deficit by 0.4-0.5 per cent of GDP during the current financial year. According to the latest data released, the overall inflation has fallen to the level of
4.89 per cent in April, which is its lowest level in three years.

“Some action has been taken by RBI in terms of controlling gold demand. To supplement these actions, as inflation comes down and returns on financial products become more attractive, it will be possible to contain gold demand,” Dr. Rangarajan said. He was speaking on the side-lines of a gold summit organised by Assocham.

The Prime Minister's Economic Advisory Council (PMEAC) has said that India’s CAD is expected to be around 5 per cent of GDP for 2012-13. The CAD had touched it’s highest at 6.7 per cent of the GDP in the third quarter of the financial year 2012-2013. Experts said that the falling prices of crude oil and gold will reduce the country’s current account deficit, giving more boost to the stock market in the country.