The 2024 Lok Sabha election results sent the Indian stock market tumbling, with the Nifty falling by 8.5% and Sensex falling by nearly 6%. However, things are not the same for gold, experts say.
“Lok Sabha elections results in India do not have a direct impact on gold prices because India is a gold price taker, and gold prices are derived from London fixing,” Sachin Kothari, Director of Augmont Gold told Business Today. “Having said that, different political parties’ attitudes towards looking at gold market policy in terms of duties and taxes are an important factor.”
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The BJP-led government raised the gold import duty from 10% to 15% in the last 10 years to curb gold imports. The Congress-led government also raised the gold import duty in 2012 and 2013 from 0% to 10%.
Gold prices, at present are hovering at ₹72,000 for 10 grams on the MCX.
“While consumer demand largely remains unaffected due to election results, the industry hopes for continuity of governance as a key takeaway from the elections and looks forward to further seamless ease of doing business” Colin Shah, MD, Kama Jewelry told Business Today. “Despite the hurdles, the Indian gems and jewellery sector has flourished in the last decade and looks forward to policy reforms that promote a favourable environment for the sector.”
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“From the investors’ perspective, gold has once again proven to be a robust hedge against economic weather fluctuations. As the stock market witnesses a blood bath owing to election results, yellow metal continues to hold the fort as it’s barely impacted by domestic factors,” Shah added.