RBI withdraws Rs 2,000 notes: Impact on Gold Sale
The withdrawal of the Rs 2,000 currency note by the Reserve Bank of India has caused panic buying of gold jewellery in various cities, including Delhi, Mumbai, and Surat. Following the announcement of the decision, numerous retail establishments in the capital saw a steady stream of people purchasing gold using Rs 2,000 notes.
Experts claimed that retailers in the Surat market were charging more for gold. Even if you have cash on hand, they will still sell gold at a 10% premium. Gold prices have risen to about Rs 66,000 per 10 grams as a result of certain jewellers starting to charge a premium of 5–10%. Although, now the price of 10 grams of gold has been corrected to around Rs 60,200.
The All India Gem and Jewellery Domestic Council (GJC) Chairman, Saiyam Mehra, confirmed the rise in traffic and queries but pointed out that the strict KYC standards had limited the actual transactions. As the Reserve Bank has set a deadline of four months, till September 30, for the withdrawal of the Rs 2,000 notes from the market, Mehra emphasised that there is no widespread panic among customers.
This all happened after the RBI removed Rs 2000 banknotes from circulation. The RBI declared in a statement that the notes of this denomination will still be accepted as legal money. Additionally, it has advised banks to immediately stop printing banknotes having a value of Rs 2000. From May 23, 2023, all banks will allow the exchange of Rs 2,000 notes into notes of other denominations like Rs 500 or Rs 1,000 up to a cap of Rs 20,000 at a time.
However, despite having large amounts of cash in Rs 2,000 notes, this restriction has discouraged many. Visiting the bank 25 times is required if you have Rs. 5 lahks in Rs. 2,000 notes. This could also be the cause of people rushing to buy jewellery rather than go to bank branches.
Demonetisation has always drawn people to gold. The fact that there are many compliances in place this time, however, makes a difference this time.
The number of people holding Rs 2,000 notes is lower than it was for Rs 500 and Rs 1,000 notes when they were demonetised in 2016, as the RBI stopped producing them in 2018–19 and they were hardly ever used.
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