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Gold purchase by jewellers drops 25% in a week



Unique identification for gold jewellery comes into effect in Kerala

As Covid-19 cases surge again and authorities bring back some of the restrictions, gold purchase by jewellers has dropped by 25% in the past one week as they anticipate many weddings to be postponed.

Lower local bullion buying is likely to bring down the import of gold in January to 55-60 tonnes from 86 tonnes in December, according to industry estimate. But prices are expected to move up amid increasing Covid cases globally, as the yellow metal is seen as a safer bet in times of uncertainty.

India’s wedding season, which begins on January 15 and continues right up to July, is typically a strong period for jewellery sales. However, with several states announcing night and weekend curfews, and restricting the number of guests at events, jewellers fear a repeat of the last two years when many marriages were postponed amid the pandemic waves.

“In the first two waves of Covid, the gold market was impacted badly and the jewellers suffered with their inventory in hand. But gradually, people have started living with it. Jewellers, too, have become cautious and they have reduced buying of the bullion as Covid cases are climbing up,” said Ashish Pethe, chairman of the All India Gem & Jewellery Domestic Council.

“There is a dip in bullion buying by almost 25% since the cases started increasing over the last one week,” he told ET. “Also, customer footfall at Zaveri Bazar, the largest gold market in the country, has reduced by 20-25%.”

While demand for gold may remain muted for a while till the Covid situation comes under control, prices are expected to move up in the short term.

Gold prices are hovering above $1,800 per ounce, adding risk premium on rising Covid cases across the globe including major economies like the US and China. Worries over the fast-spreading Omicron variant of the coronavirus and higher inflation have capped the downside for gold prices despite a hawkish stance by the US central bank.

“We expect gold prices to trade higher in the short term on virus uncertainty and negative US bond yields, as traders and investors may fear that a sooner rate hike (in the US) may hurt the economic growth,” said Tapan Patel, senior analyst (commodities) at HDFC Securities.


The resistance for spot gold on COMEX lies at $1,860 per ounce with support at $1,780 for the short term, he said. In India, the MCX Gold February contract may keep the current range on rupee fluctuations with an important resistance at Rs 48,800 per 10 grams and support at Rs 47,300, he added.

Courtesy: Economic Times

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