Gold price crash helps improve BoP : Rangarajan
New Delhi (PTI): Sharp decline in gold prices will have favourable impact on the Indian economy especially...
New Delhi (PTI): Sharp decline in gold prices will have favourable impact on the Indian economy especially the high current account deficit (CAD) and the overall Balance of Payment (BoP) position, Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan has said. "It (decline in gold and crude oil prices) will have favourable impact on balance of payment (BoP) because India is a big importer of gold and crude oil," Rangarajan said. Gold prices fell to 21 month `26,440 per 10 grams in the domestic markets on April 16 due to continued sell off in the global markets. Though there has been some recovery in gold prices in the spot as well as futures market, uncertainty looms large over the way the prices would move going forward. Gold prices had touched the all-time high of `32,975 per ten gms on November 27, 2012.A Rangarajan said: "Substantial reduction in price of gold can bring about significant benefits to the balance of payment." Gold and crude account for about 40-45 per cent of country's total imports. Planning Commission Deputy Chairman Montek Singh Ahluwalia said the declining prices will "certainly make our macroeconomic balancing exercise easier...Now people will not rush into gold as an investment asset. They will look for other more productive assets. I think that would be good for the economy." India's CAD, which is the difference between inflow and outflow of foreign exchange, widened to historic high of 6.7 per cent of the Gross Domestic Product (GDP) for the quarter ended December 2012. The softening of crude oil and gold prices will help in improving the CAD. Brent crude oil futures have seen a 10 per cent price slide this month. "While all efforts have been made to reduce the attractiveness of gold as an asset, there is still a large import of gold into the country", Rangarajan said. However, some experts fear that declining prices may give rise to heightened demand of the gold. Gold likely to remain stable Mumbai (PTI): Gold prices, which took beating last week, are likely to remain stable at the current level and move in the range of `25,500-26,500 per 10 grams in the near-term waiting for some trigger to take direction, experts have said. "In the current scenario, gold is bearish. The prices of the yellow metal has already taken a beating last week and is likely to remain range bound in the near term. The precious metal is waiting for some trigger to take either upward or downward direction," Angel Broking, Associate Director Naveen Mathur said. At present, the market is bearish for the entire commodities segment as there is not any news that will trigger prices to catch up on the higher level, he said. Echoing a similar view, Commtrendz Research Director Gnanasekar Thiagarajan said gold is likely to remain in this zone for some time unless the US dollar gains strength and there is some geopolitical news to boost the yellow metal. He said gold is likely to rule at `25,500 in the lower range. However, he expected it to hit `28,000 in the upper range. A
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18 Jun 2019 2:58 PM GMT