Gold Market Shines

Published on 07/10/09

Gold prices hovering around Rs 15,900 per 10 grams have failed to deter customers from buying gold and diamond jewellery this festive season. Interestingly, this phenomenon has made the jewellers 'glitter' more than the jewellery itself. Kiran Dixit, head-marketing, Tribhovandas Bhimji Zaveri (TBZ-the original, as they claim), said, "We are seeing very good response this festive season. Sales are 35-40 per cent more than the previous year's season."

"Buyers are not worried about either the economic slowdown or the higher prices. They are in a fairly festive mood and ready to celebrate with gold and diamonds," Dixit added. Last year, buyers stayed away from buying jewellery in the wake of the global recession and consequent loss of jobs in several industries. There was fear and uncertainty among consumers after the failure of many banks in the US and Europe, beginning with the fall of Lehman Brothers in mid-September 2008. Besides, last year Dussehra and Diwali arrived late in October and November, unlike this year.

On Tuesday, gold hit a record high at $1,036.40 an ounce in the global market as the dollar dropped on a report, later denied, that Gulf Arab states were considering abandoning the US currency for oil trade. Responding to a query, Milind Gandhi, owner of Kankai Jewellers, said, "More than gold jewellery, a greater number of people is attracted to gold coins this time. Demand for coins of 5-100 grams is very high."

"Companies and stock market players have also joined other customers in opting for gold coins, in turn boosting their sales," Gandhi added. The demand for gold was muted from October 2008 till August 2009. However, beginning August this year, jewellers started importing gold in a big way anticipating a rise in demand. Import of gold touched a high of 21.8 tonnes in one month.

Gold imports during the year to August 2009 remained low at 81.2 tonnes compared to 261 tonnes in 2008. This is chiefly due to lack of interest by gold wholesalers, who were expecting a lukewarm demand for the precious metal, till recently.

Signs of economic recovery emerging in developed countries over the past few months and the recent spiral in the price of the yellow metal have reduced its attractiveness as an investment destination. However, in India, gold prices may see further spiral in the next couple of months, that is, during the festive season that will continue till January 1, 2010.