Price slide sees Indians scrambling for gold

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New Delhi | Updated: July 24, 2015 10:26:48 AM

Sales of some of large jewellers jump 20-30% this week

goldSales of some of large jewellers jump 20-30% this week. (Reuters)

The recent slide in global gold prices to five-year lows has seen Indians scrambling for gold, heralding the beginning of purchases for the upcoming festival season a bit early this year. Sales of some of the large jewellers jumped 20-30% this week from the same period last year and smaller ones witnessed a 10-15% rise in sales, traders said on Thursday.

Gold purchases for the festival and marriage season usually start from August, but people started picking up gold early this year as prices dropped Rs 750 per 10 gram in just three days to a four-year low of Rs 25,250 per 10 gram (in Delhi) on Wednesday. Even before the prices started crashing this week, gold was roughly 10% cheaper in the domestic market than a year before. On Thursday, however, the price gained R120 per 10 gram to R25,370, still way below a year before.

Ramesh Kalyanaraman, executive director at Kalyan Jewellers, the country’s second-largest jewellery chain, said, “We have seen a 20% jump in our sales this week from a year before, much higher than the usual around this time of the year, as people seek to take advantage of the plunge in prices.” “Since the availability of the raw material isn’t an issue now, we expect sales to be better than last year,” he said.

Sunil Jindal, managing director at SRS Group, expects a 20-30% spurt in sales from the June level. “As we are approaching the wedding season, this could be the best time to pick and choose the jewellery for most people, given the low prices,” he said.

Even online purchases of gold have picked up significantly, albeit on a low base. Jagrati Shringi, co-founder of Voylla.com, said her company has seen a 23% increase in sales so far this month, compared with the previous month. “We hope to continue this traction for the rest of the month,” she added.

However, for sustained buying even for purely investment purposes, a stability in prices is required, said some jewellers. “The crash in gold prices to five-year lows globally has created a lot of turbulence in the market. The market is bearish and domestic prices might even drop to as low as R24,500 per 10 gram, although there are chances prices may bounce back on strong festive season,” said Rajesh Tulsiani, co-founder of Mumbai-headquartered Dwarkadas Chandumal Jewellers.

If prices remain at this level, the country’s gold demand could be in the range of 950-1,000 tonne in 2015, up from 843 tonne a year earlier, said analysts. But unless gold prices stabilise at a certain level soon, those wishing to buy the precious metal purely for investment purposes may defer purchases anticipating a further fall in prices, they said.

Jewellery purchases, however, could continue to remain robust as demand for such items is usually less price-elastic, they added.

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