Demand for gold weakens on price rise

Chennai: Rising gold prices has taken the sheen away from gold buying with jewellers witnessing a 25% drop in demand. From seeing an increase of almost Rs 2,000 per 10 grams — a 6% rise-since June 15, domestic gold prices are subject to periodic peaks and troughs in the last 30 days.

On Tuesday, 10 grams of 24-carat gold stood at Rs 36,090 ( in Chennai). “In the past 3 months, gold prices were never steady and customers are confused as to when to make the purchase. While demand is still there, those who look at gold as an investment are on a wait and watch mode,” said Jayantilal Challani, president, Madras Jewellers, and Diamond Merchants Association.
The sharp price rise, began on June 20, when global gold prices hit a 5-year-high following the Fed’s signal for a rate cut.

Mirroring the global rise and also getting impacted by the strengthening rupee and the newly-imposed customs duty announced in the budget, jewelers are not sure of an immediate turnaround in fortunes as the lean season kicks in. N Ananthapadmanabhan, MD, NAC Jewellers adds that the last 10 days have seen a 30% drop by volume.

“This quarter by itself sees less business and gold prices have further deterred buyers. As such, the prices are high owing to global tensions namely in the US, China and Iran. To top it, customs duty has gone up. Despite us trying to give out discounts with aadi approaching, consumer buying does not really look up,” he said.

Titan, whose jewellery division Tanishq saw a muted growth in the April-June quarter. The company attributed high June prices to have dented the demand. However, a cross-section of
jewellers adds that buying would come back soon as the country is dominated by wedding purchases.“Despite India being a price-sensitive market, consumers have just postponed purchases, leading to a 25% dip in demand in the last one month. The impulsive buyer can stall his purchase but we are confident about wedding jewellery purchases coming to the rescue,” added Venkatesh Babu, president, Bengaluru Jewellers association.

Courtesy: Times Of India