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Fall in gold prices may lead to fall in property prices
Posted on: 20/Apr/2013 3:28:49 PM
A report that has been published by Karvy Stock Broking has said that the fall in gold prices may lead to property prices falling in the country.
According to the report, ‘A fall in gold prices could prompt more money to chase the precious metal and leave less for real estate. This means as investors eye gold to make money, real estate will not attract as much investor interest, which in turn will make homes affordable for prospective home owners.
‘With such a sharp fall, there is a strong possibility of big commodities derivatives desk going bust, resulting in future contracts unwinding and further correction in gold prices.’
Analysts Manoj Kumar Manish and Parikshit Kandpal say, ‘Over the last two years, average gold import has been $51 billion which equals annual residential real estate purchase value of about $48 billion.
‘There (are) multiple reasons for gold price to correct further from here. Cyprus is selling its gold as a bailout measure and Japan, with is fiscal stimulus pegged at $1.4 trillion, may also sell its gold to finance this pump priming move. Other troubled economies like Italy and Spain may follow suit. To sum it up, there is an opportunity for everyone if the relationship holds.’
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