Cash Crunch Hits Gold Demand During Peak Wedding Season
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Mumbai resident Shashikant Zhalte's wedding this weekend will be less sparkling than his family had hoped, thanks to a cash shortage following Indian Prime Minister Narendra Modi's shock withdrawal of high-value notes to fight "black money".
Zhalte bought gold jewellery for his wife-to-be months ago, but had delayed purchases for his mother and sisters.
Then came the Modi bombshell on November 8, in the middle of the wedding season when gold demand spikes, forcing Zhalte to drop his plans to buy an additional 50 gms, worth around $2,200.
The scenario is being played out across India, the world's second biggest consumer of gold, where it is customary to gift jewellery in marriages.
The wedding season stretches from September to April, and Thomson Reuters-owned metals consultancy GFMS says it accounts for more than half of the country's annual demand for gold.
More than two-thirds of that demand of around 800 tonnes a year comes from the countryside, where farmers are struggling to get enough cash to buy seeds and fertilisers in the sowing season. Penetration of credit or debit cards and money apps is very low in rural India.