Gold once again catches fancy in India as prices dipAugust 19th, 2008 - 4:06 pm ICT by IANS
New Delhi, Aug 19 (IANS) Prices of gold in India, the largest market for the metal in the world, may have started to climb up slightly after dropping to a multi-month low last week, but there has been no let up in demand, ahead of the festive season.Such has been the demand that both traders of the yellow metal and jewellers said they may even run out of stocks, which could send the prices soaring again before the start of the festive season from October.
“In the last one week, we did three times more sales than what we were clocking in the first half of this year,” said Anantha Padmanaban, partner at Nathella Anjaneyulu Chetty and Son, one of the largest jewellers in Chennai.
“If the demand continues like this, we jewellers will run out of gold stocks,” added Padmanaban, whose jewellery shops attract hundreds of customers every day.
“I am getting a lot of inquiries from people wanting to buy gold after the fall in prices,” echoed Mumbai-based jeweller K.H. Bhat.
After falling to multi-month lows the week before, global prices rose in India after a weakening of the US dollar and a rise in crude oil prices. The metal had dropped to as low as $772.98 an ounce in Singapore Aug 15 - the lowest since October.
After that, reports from Singapore said gold for immediate delivery gained for the first time in the last three trading days till Monday, rising as much as $11.25, or 1.4 percent, to $798.95 an ounce.
Last wekk gold prices in India had fallen below Rs.11,300 per 10 grams, before edging up slightly Monday. During the slump, HDFC Bank, for example, was asking for Rs.11,285 to buy and Rs.11,676 to sell the metal.
At the retail level, however, Monday saw Mehrasons, one of the largest jewellers in the capital, quoting Rs.10,535 per 10 gram for 22 carat gold.
“Jewellery prices have fallen now. And given the way prices are fluctuating, I plan to buy gold jewellery this week,” said Kashma Acharya, a Mumbai housewife and a regular buyer of jewellery.
According to the World Gold Council, the retail investment demand for gold also followed the same trend as that for jewellery. As prices started rising in the second quarter, the demand fell as much as 41 percent to 43.4 tonnes.
“But we are now seeing strong and growing demand at lower prices in the world’s largest gold buying market of India and believe international investment demand in the retail coins and bars market will also strengthen,” the council said.
Given this backdrop, the sharp fall in prices brought back smiles on the faces of both buyers and sellers in India.
“I certainly hope the prices fall further as this is boosting demand,” said Ajay Mehra, the managing director of Mehrasons. “The price spike had hit our sales hard and a correction in prices was long overdue.”
But the volatility in the market is a cause for worry.
“The gold market situation is now crazy. The fluctuation in prices are affecting our business,” Pankaj Parekh, regional chairman of the Gem and Jewellery Exports Promotion Council, told IANS in Kolkata.
“People are buying gold at this price, but it all depends on the global market,” warned Hiren Soni, a bullion trader in Mumbai. “You can’t make a judgement now on future rates as one of the key determinant of prices is the US dollar.”
Nathella’s Padmanaban also said the situation was volatile. “We hope the prices settle at around Rs.1,020 per gram. A price of Rs.1,000 is a psychological mark. If gold breaks that mark then you can call it a crash.”
(With inputs from V. Jagannathan in Chennai, Abhijit Deb in Mumbai and Aparajita Gupta in Kolkata)