Kolkata: Fears of a major escalation in the Russia-Ukraine war sparked a fresh rally in gold prices, increasing the price of the yellow metal by Rs 2,820 per 10 gm to Rs 76,559 on Thursday, from Rs 73,739 on November 19.
The latest price rise led consumers to promptly return to jewellery stores to place advance orders for the wedding season in December on fears of a further increase in gold prices. The Mumbai bullion market was closed on Wednesday due to state elections.
Consumers were on a wait-and-watch mode, having paused purchases of heavy bridal jewellery on hopes of a further correction as prices of gold had fallen 6.25% after the election of Donald Trump as the new US President on November 5. Strengthening of the dollar had reduced gold prices, generating expectations that international prices would correct by another $50-60 per ounce, which would have a further cooling-off effect on the Indian market.
“The upward movement in gold is largely triggered due to the escalation of war between Russia and Ukraine. The use of long-range missiles by Ukraine and further retaliation by Russia may push up gold prices from current levels,” said Colin Shah, managing director of Mumbai-based Kama Jewelry. “Consumers are back to the stores to shop for the wedding season purchase. Gold prices are still way off their recent highs. This is a big buying opportunity.”
Shah expects gold prices to trade at the current levels in the short to medium term, eventually recovering to their recent highs with a projected softening of interest rates in the US and India in the first half of 2025.
Publicly listed jewellery retailer Senco Gold & Diamonds, which has 166 stores across India, is seeing an increase in customer footfalls since Wednesday evening. Suvankar Sen, MD, said, “The news of escalation in geopolitical tension prompted urban buyers to start purchases from last evening… We are witnessing good footfalls for bridal jewellery. Bridal necklaces are in demand as they are generally heavy-weight.”
