Gold prices have declined for the second consecutive week since November 9 as they are now down by 7.4 percent. Silver has also seen a slump in price as it has gone down by 8.17 percent.
The trend is unusual for jewellery sector this time of the year as India, the world's second biggest consumer of gold, usually sees a surge in prices due to the demand during peak wedding season.
However, the main reason for the price fluctuation can be traced to the Narendra Modi government's announcement to ban high-value currency notes of Rs 500 and Rs 1,000.
Both, gold and silver, witnessed a slight surge in prices on November 9, a day after the announcement of the currency ban, increasing from Rs 43,850 to Rs 45,000 and from Rs 30,850 to Rs 31,750, respectively.
This has been correlated to the sudden surge of customers who were exchanging their illegal notes with jewellers, albeit at a premium favouring the jewellery merchants. But the government was quick to plug such leakage as it made it mandatory to submit PAN details for buying jewellery to restrict conversion of black money to white. Notices were also sent from the excise department to about 600 jewellers in the country.
While the share price of Titan was down 3.25 percent to trade at Rs 306.95, it was up by around 4.83 percent for Gitanjali Gems, which was trading at Rs 55.30 at National Stock Exchange on Monday. Tribhovandas Bhimji Zaveri was trading 0.24 per cent up at Rs 61.40 at NSE.