The price of 22-carat gold fell by Rs.31 per gram on Friday following a slump in global demand and international cost fixed for the precious metal. One gram of 22-carat-gold cost Rs. 2,864 against the previous day’s price of Rs.2,895. However, the depreciation of the rupee meant that customers could only reap a limited benefit.

The cost of the yellow metal had peaked to Rs.3,068 per gram at the end of November. For the past one month, the price had not witnessed any drastic hike as the demand too had dropped by 25 per cent, said members of Madras Jewellers and Diamond Merchants Association. On Thursday, the cost of gold had increased to Rs.2,895, which was Rs.20 more per gram than the previous day’s price. Jewellers said the rise was due to Union Minister P. Chidambaram’s announcement that import duty on gold may be increased.

On Friday, the price fell by an unusual Rs.31 per gram. However, only a few jewellery showrooms, including those at Anna Nagar, saw a marked increase in the number of customers. Some customers like R. Vasantha of Kilpauk who had planned to purchase jewellery a few days later said they had advanced their visit to the jewellery showrooms.

Jayantilal Chalani, the association’s president, said that demand for gold and silver has decreased in the past one month. The global economic slowdown had also impacted on the cost of gold, which has not seen much fluctuation in price.

However the weakening of the value of the rupee meant that jewellers have to pay more to import the gold, said N. Ananthapadmanabhan, regional chairman of All India Gems and Jewellery Trade Federation. One gram of silver cost Rs.60.50, which is Rs. 2 less than Thursday’s price. The present trend may continue for one more month.

The volume of import has already come down by 30 per cent over the past six months as the price has peaked last year, Mr. Chalani said. Jewellers said that the decision to increase import duty may also lead to smuggling of the precious metal.

Keywords: Gold prices

More In: Chennai