Gold rises as safe-haven demand, rate cut bets keep prices elevated
Gold tends to perform well during economic turmoil, with reliability that can help offset the risk of more volatile assets in conditions such as geopolitical uncertainty.
Gold tends to perform well during economic turmoil, with reliability that can help offset the risk of more volatile assets in conditions such as geopolitical uncertainty.
Some jewellers said they are now pushing studded jewellery where the margins are up to 3x higher than plain gold jewellery.
Though the price of gold is on the higher side at Rs 59,000 per 10 gm compared to Rs 50,880 per 10 gm this time last year, sales would have been good had there not been a rally in the stock market, said Surendra Mehta, national secretary, Indian Bullion & Jewellers Association (IBJA).
The lower purchases in the world's second-biggest gold consumer could limit a rally in global prices. Falling demand for gold imports could also help to narrow India's trade deficit and support the rupee.
There was a sharp rise in yellow metal prices in a very short span of time to a peak of Rs 64,000 per 10 gram. Also, some demand got shaved off due to the overall tax compliance in the country, he said.
As compared to the previous year, the brand has witnessed an 8 per cent jump in the average ticket price of gold jewellery exchange.
"Retail buying has been improving slowly. Footfalls at jewellery stores have improved because of lower prices," said Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsingji.
Despite a sharp spike in gold prices from January to March this year, the demand for the yellow metal remained upbeat during the quarter in Gujarat. Against a 17% decline in gold demand in India during the quarter according to the World Gold Council, gold imports in Gujarat grew 75% during the same period.
Even if the monsoon is not good, gold consumption in the country will touch 700-750 tonnes this calendar, Somasundaram PR, India head of World Gold Council (WGC), told ET. “Closer to the elections, there will be a lot of cash movement in the rural areas, which may be routed to gold purchase as traditionally gold is considered an important asset class in rural India,” he said.
Gold prices have risen about 7% in the past fortnight, partly in response to concerns over a contagion effect in the wake of the Credit Suisse crisis. The banking woes of the West threatens to impact the global growth rate. It has also led to a belief that the Reserve Bank of India would slow down its pace of rate hikes, along with ensuring ample system liquidity. The hopes of a lower rate hike have pushed up gold prices.
Joy Alukkas, Malabar Gold & Diamonds and Senco Gold & Diamonds said customers had held back on purchases expecting a cut in import duty on gold in the budget, which did not happen. This prompted them to loosen their purse strings for the yellow metal.