As gold turned cold on Monday with the
price of yellow metal tumbling to a 15-month low, retailers are
witnessing a surge in demand and expect up to 50 per cent spike in sales volume in this marriage season.
Gold prices plummeted by Rs 750 in the Delhi market on Monday to hit a 15-month low of Rs 27,600 per 10 grams, under an avalanche of bearish sentiments triggered by heavy sell-offs of the precious metal in global markets.
Mail Today reports the sharp fall came on the back of Rs 1,250 per 10 grams decline on Saturday
bringing the price of the yellow metal to its lowest level since December 31, 2011. In two trading days, gold has come off by Rs 2,000 in the Delhi bullion market. The ferocity of the fall was greater in Mumbai where prices fell by Rs 1,330 on Monday alone.
Investment analyst Arun Kejriwal told
Mail Today, "The fall in bullion prices is much more than expected and the trend right now is downward." This was mirrored by the price of gold on the futures market, at Rs 25,642 on MCX for contracts expiring on May 4. With inflation also sliding down in India, gold is not being viewed as an investment hedge against it.
In the wake of this, the retailers are expecting prices to fall further to around Rs 25,000 per 10 grams in the immediate short-term.
"Over the weekend, demand has picked up and there is surge in footfalls. As such, demand for jewellery has been up since Holi due to the upcoming wedding season. However, the recent plunge in prices have added to the momentum.
"We are expecting a whopping 50 per cent growth in sales volume during this season over the same period last year," Vice-Chairman of the Mumbai Jewellers Association Kumar Jain said.
Jain, who also owns Umedmal Tilokchand Zaveri retail chain, said jewellers are expecting a good season on the back of expectations that the prices are likely to tumble further to around Rs 25,000 due to global cues.
Prices in Mumbai Spot market on Monday was ruling at Rs 26,550 per 10 grams compared to Rs 28,410 in the same period last year.
Echoing a similar view, Delhi-based PCJ Jewellers Managing Director Balrram Garg said the demand for jewellery has grown during the last two-three days as gold prices started declining.
"We are expecting 30-40 per cent sales growth, both in value as well as volume terms, during this season," he said, adding that the prices may decline by another 2-3 per cent.
Tribhovandas Bhimji Zaveri Chief Executive Prem Hinduja said there has been a positive change in the attitude of buyers with growing footfalls in all stores.
"Historically, we have always seen that whenever there has been a decline in gold prices, jewellery demand has increased even during the inauspicious periods. And the present trend is not different. However, it is too early to give any figures," he added.
However, Gitanjali Gems CMD Mehul Choksi feels that people are still waiting for prices to go down further before going in for any heavy purchase.
"It was a good weekend. As it is the demand was already there for the wedding season. However, for any additional purchase, people are still waiting for the prices to decline further. Currently, we are seeing more preference for diamonds and not gold," he said.
If prices continue to remain weak, there is likely to be up to 15 per cent growth in demand, he added.
Bombay Bullion Association President Mohit Khamboj said wedding demand will always remain even if prices are high. "If gold prices continue to decline there is likely to be up to 40 per cent rise in sales. However, it is still early days to comment as people are looking for more price decline," he said.
The government had hiked the import duty on gold and platinum to 6 per cent from earlier 4 per cent in February to discourage imports with a view to check the widening current account deficit.
With PTI inputs
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