The gold price has been on continuous upscale for quite a long time.
In this situation, it was announced during the recent budget that the excise tax on gold has been reduced from 12.5% to 7.5% whereas 2.5% of Agricultural Infrastructure Development Cess will be levied as a new introduction.
Apparently, the gold price dropped rapidly. Gold was sold for Rs 38,848 per sovereign as of the fifth of last month and is now being sold for Rs 35,080 per sovereign.
People’s interest in gold investment never fades away whatsoever the price hike maybe.
This is because of the fact that gold can be of great use during times of emergency besides being considered as the best form of investment along with the feasibility of purchasing it in the form of ornaments.
For availing of other types of loans, we will have to produce a lot of documents.
But that is not necessary in the case of gold.
Gold can easily be mortgaged in banks, finance agencies and other private companies.
Reports say that the rate of jewel loans availed during the pandemic has increased by 30% when compared to the pre-Covid period.
The Reserve Bank of India had earlier ordered to give up to 75% of the value of the gold pledged as loans. before the pandemic.
Whereas, during the pandemic, it has increased the loan-to-value (LTV) ratio for gold loans to 90%.
The relaxation in LTV will be available on loans availed of till 31 March 2021, which has helped a lot of people.
In the nationalised and private banks, gold loans have been lent at a rate of 8.5% to 12% of annual interest.
Since people are gradually returning back to normal life, many are showing their interest in returning their ornaments that were mortgaged in 2020 and invest in new ventures.
The demand for gold in India has dropped drastically which is unprecedented in the last 25 years.
The demand for gold has dropped to 446 tonnes which was 690 tonnes in 2019.
But still, the demand for gold investments have increased by 8%.
Similarly, as of the Quarter up to December, the gold purchase rate has also increased by 21%.
It is obvious that the value of gold among the people has increased as it was a ‘saviour’ during the pandemic.