The recent deposit rate cut has had no impact on gold market, according to an expert in Tehran.
Mohammad Keshti-Aray, president of the Gold and Jewelry Union, said although one week has passed since the Money and Credit Council (MCC) announced a two-percent cut in the deposit rate ceiling, the gold market has remained unaffected.
“The very news of deposit rate cut should have affect the gold market but it has not”, he said attributing the reason to the “insignificant cut”.
The MCC has cut the deposit rate ceiling from 22 percent to 20 percent but Keshti-Aray says it’s still higher than inflation “encouraging the depositors to maintain their savings in the banks.”
He noted that the gold market has lost luster in the eyes of investors in light of stable global and domestic gold prices. As money always flows into profitable markets, he expected lesser migration of money from banks into the gold market. In the past few months, many critics had warned that if deposit rates are cut, capitals may flow into gold and currency markets, and not necessarily into the capital market or manufacturing sector.
The MCC’s decision will be binding for all commercial banks and will enter into effect as of May 6.
