Indian gold retailers miffed by sudden rush of pre-2005 notes

The announcement to withdraw pre-2005 currency notes by end-March by the Reserve Bank of India (RBI) triggered jewelry sales in India. People resorted to bulk gold purchases in an attempt to make use of the older banknotes with them. The huge rush by customers to offload their stock of old currency, even led to some retail jewellers stop accepting pre-2005 currency notes.
People in possession of unaccounted cash were seen trying to convert their currencies by buying gold jewelry and bullion in small quantities. This led to a marginal rise in domestic gold prices. According to trade sources, gold sales surged 10% to 15% on Tuesday. The drop in gold premiums from $120 to $80 per troy ounce too boosted the sale of yellow metal in the country.
The RBI circular clearly directs all commercial banks to accept and exchange pre-2005 notes. Hence, there is no problem in accepting such notes as of today. Currently, retailers are not charging any commission for accepting old notes. However, the excessive flow of black money is a matter of serious concern, say jewelers. Industry sources stated that in order to stem the huge flow of old currency notes, the retail jewelers at a later stage may even impose commission on accepting currency notes printed before 2005.
Source:Bullion Bulletin

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