MUMBAI: Goldsmiths often report that the rising rate of bullion does not deter festive buyers and investors. The first has a pressing need to purchase while the second is mindful that the value of the precious metal will only appreciate. However, this past week since gold broke the psychological barrier of Rs 65,000 per 10 gm has indeed witnessed a dent in demand for various reasons.
On Friday the price of 24 carat gold stood at an astronomical Rs 67,000 per 10 gm. Bullion traders say it is a matter of days before the Rs 70,000 fence is breached.
Jewellers in Zaveri Bazar are sitting idle as sales volumes have halved. Kanaya Kakad of JK Brothers said, “The spiralling rate of gold has caused a drop in demand by up to 60%. Customers have tightened their fists because the financial year comes to an end Mar 31 and spending typically slows down. No wedding mahurats are scheduled after Holi Mar 25 either. And the general election is on the horizon.”
The middle class Maharashtrian hub of Dadar is shorn of shine as well. Yogesh Thakur, manager of Waman Hari Pethe Jewellers in this locality, said, “Demand has slowed considerably since the past 10-12 days and grammage has fallen. At our store today, the gold rate is Rs 66,083 per 10 gm but once you include GST it will cross Rs 67,000.”
International factors directly amd speedily determine local prices. Former chairman of the Gem & Jewellery Export Promotion Council (GJEPC) Colin Shah, also MD of Kama Jewelry, took note of recent sticky US inflation numbers which preclude a possibility of a rate cut by the US Fed. He said, “There is a strong indication that gold will breach the 70,000 mark. The major propeller of this price trend continues to be global political unrest and global uncertainty. In India this rise in rates will have a temporary (downward) impact on demand. However, the Indian customer has a large appetite for gold. Global economic shocks will trickle down into the domestic market, but will be absorbed. Going forward, the consumer market of gold has remained buoyant irrespective of such global headwinds and will continue to do so.”
