A day after Prime Minister Narendra Modi announced that Rs 500 and Rs

1,000 currency notes would cease to be legal tender from the midnight of
November 8 a move aimed at cracking down on the flow of black money
those in possession of unaccounted wealth were seen rushing to jewellers to
buy gold. Jewellers kept opened their shops/showrooms whole night as there
was a huge rush outside the store. Jewellers association made a statement
that there was a sudden increase in demand as people considered
investment in gold to be safe and to get rid off their old notes as much as
they can. While these people were willing to pay huge premiums, jewellers
were ready to accept old currency notes. As a result of this rush, there was a
sudden spurt in demand for gold. After an immediate initial gold buying rush
on the eve of demonetization which lifted the precious metal's prices to 3year highs. According to market estimates, as much as $1 billion worth of
gold, or around 30 tonnes, has been imported since November 9. The supply
remained constant for the next 3 days as the jewelers were able to manage
sales and sell it at a higher price. The price per 10 gram of gold rose up to
Rs 48,000 in Mumbais grey market, compared with the usual market rate of
around Rs 30,000, as many scrambled to convert their black money to safe
haven assets, two bullion dealers, who refused to be identified, said, citing
the sensitivity of the issue.
The transactions took place on past-dated bills; even VAT was paid. GFMS
Thomson Reuters estimates that Indias gross official import of gold was
worth nearly $1.5 billion as of November 14. Of this, as much as $900 million
worth of the metal was imported after the demonetisation of high-value legal
tenders.

Here, Do is demand for gold before demonetization and So is the supply

before demonetization. Eo is the point of equilibrium when Demand is Do,
Supply is So and Price is Po
Quantity curve Shifts from Qo to Qn after the demand of gold.
Dn is a sudden sharp increase in the demand for gold for 3 days just after
demonetization. Here we can see that after demonetization Point of
equilibrium shifts from Eo to En and the demand curve changes from Do to
Dn. Also the price changes from Po to Pn. The Supply curve remains So as
the supply is constant. So talking about our example, as soon as
demonetization move is announced price of gold changes from Po to Pn,
demand changes from Do to Dn and point of Equilibrium shifts to En
Here, So is the supply which was constant
Here, Po is the price of gold per 10 gm a day before demonetization i.e. Rs
30,000 and Pn is the price of gold per 10 gm just after demonetization i.e. Rs
48,000. So we can say that a sudden rise in demand caused price of gold to
increase from Po (30,000) to Pn (48,000)