Gold purchases reversed more than two weeks of slow pace to climb on Monday as consumers dropped caution on prices to choose a tryst with the precious metal during Dhanteras, considered auspicious for gold buying, bringing back some lustre in the build-up to the Diwali. However, experts warn against unscrupulous jewellers passing on sub-standard products at lower prices to improve sales.
?Gold sales are good on Monday due to Dhanteras. I expect the sales to rise around 20% in value terms in the key week to Thursday. But in terms of volumes, they may be down by around 20% as gold prices have risen significantly from a year earlier,? Bombay Bullion Association President Prithviraj Kothari said, adding that larger purchases are expected if prices fall to around R25,000 per 10 grams from the current R27,000-level. ?Liquidity still remains an issue,? he said.
He said demand across major regions has remained uneven, with some cities such as Pune and Ahmedabad are recording good sales, while some in the Southern regions have faired below last year level. According to an industry estimate, festival gold sales were to the tune of 70 tonne last year.
?With prices stabilising, big Diwali season around and the wedding season ahead, demand is sure to see a surge. Demand for gold as an investment option as well as jewelry demand across the country will rise too,? said Ajay Mitra, the managing director (India and West Asia) of the World Gold Council. Gold futures for December delivery on Multi-Commodity Exchange rose by R80 intraday to R26,848 per 10 gm on Monday, falling from the record level of more than R28,000 per 10 gm in September.
A senior official with state-run MMTC, the country?s largest gold importer and a key seller of jewellery and coins and bars, said sales have been ?encouraging? during the company’s 10-day gold festival through Monday. Sales are expected to climb up to 25% in value during the festive season, which kicked off with Eid and reaches its peak on Diwali, the official added. ?There is sustained interest for gold purchases during Dhanteras also because of marriage season demand,? she said. The MMTC gold exhibition-cum-sale has put on display over 1,00,000 jewellery designs, weighing over 250 kg, from 15 states, she said, adding all the products have hallmark certification for purity.
Trade and industry executives have warned that many jewellers are selling sub-standard gold products at slightly lower prices to woo consumers, especially in rural areas.
According to a Bureau Of Indian Standards (BIS) survey, of 162 samples drawn from 16 cities, more than 90% were found to be failing the declared purity. ?This means the consumer loses 20% to 30% of gold in jewellery purchases, which is significant in financial terms,? said the MMTC official.