Gold prices declined by ₹350 on Wednesday to close at ₹29,705 per 10 gm on weak global cues and lower demand from local jewellers.

The demand for the yellow metal in the domestic market has remained low due to better returns from financial assets and a government crackdown on the bullion industry.

The demand is expected to revive with the start of the wedding season next month. The higher minimum support price for kharif crops and better progress of the monsoon are expected to support rural demand in the coming days.

Nitin Khandelwal, Chairman of the All India Gem and Jewellery Domestic Council, told BusinessLine that gold prices have fallen by ₹1,700 per 10 gm in the past month and may come down by another ₹250, but people should buy now rather than waiting for the lowest price. Currently, demand is somewhat low as people want to save money for their children’s college admission, and farmers are spending money to buy seeds and fertiliser for kharif season.

Allaying fears of a government crackdown on the jewellery sector, Khandelwal said the government was willing to extend all support and had exempted e-way bill, besides fixing a special rate of 3 per cent for gold jewellery.

However, he added, the only issue is getting bank finance despite the government’s support for the industry as bankers’ confidence in this industry is quite low.

“Bankers do not want to take risks by extending loans to jewellers and getting into trouble closer to their retirement age if there is a default. They claim they have nothing to gain or lose by financing this sector,” he said.

Globally, gold rate extended its downtrend, sinking to the lowest in a year on a stronger dollar, rising US interest rates and the prospects of a trade war.

Global gold prices have dropped by over 10 per cent since touching a peak of $1,365 an ounce in mid-April.

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