Indian cash crunch hits gold demand during peak wedding season

by - 5:00 pm

Mumbai resident Shashikant Zhalte's wedding this weekend will be less sparkling than his family had hoped, thanks to a cash shortage following Indian Prime Minister Narendra Modi's shock withdrawal of high-value notes to fight "black money".

Zhalte bought gold jewellery for his wife-to-be months ago, but had delayed purchases for his mother and sisters. 
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Then came the Modi bombshell on Nov. 8, in the middle of the wedding season when gold demand spikes, forcing Zhalte to drop his plans to buy an additional 50 gms, worth around $2,200. 

  Gold demand from India is not a major factor in global prices, but has historically provided support when the international market is falling.

Gold is trading at its lowest levels in nearly 10 months in anticipation of a U.S. interest rate hike in December. Higher U.S. rates would boost the dollar and increase the opportunity cost of holding the metal.

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