Gold prices on Friday climbed to Rs 72,967 per 10 gm, rising by 1.6 per cent compared to Thursday. This daily surge in prices has never been witnessed in the last 50 years, bullion dealers from Zaveri Bazaar said. In a month, gold prices have shot up by 10.75 per cent, making the yellow metal costlier for those who have weddings in the family.
With 3 per cent Goods and Services Tax (GST), 10 gm gold is commanding a price of Rs 75,165 at the retail end. Many weddings are happening in April as there are no auspicious dates in May and June for weddings this year.
Taking a cue from gold, silver prices have also inched up to Rs 83,605 per kg on Friday from Rs 82,343 per kg on Thursday a rise of 1.53 per cent in a day.
This continuous rally may impact gold sales during Akshay Tritiya, one of the major gold jewellery selling occasions for the gold trade. According to Hindu belief, buying gold on Akshaya Tritiya is considered a sign of good fortune for bringing in prosperity to the home. This year Akshaya Tritiya falls on May 10.
Prithviraj Kothari, managing director of Zaveri-Bazaar-based RiddiSiddhi Bullion said “Jewellers are not buying bullion for making jewellery. Prices of gold are going up every day which is an unusual phenomenon. There has been no correction in prices in the last one month. If this trend continues till Akshaya Tritiya, then demand will drop by 60% -70%.”
The bullion remains supported by a rise in safe-haven demand amid uncertainty over the U.S. Fed‘s rate cut policy as the officials keep changing views or delaying rate cuts based on inflation level, central banks on a gold buying spree (especially, in China), hedge against inflation as commodity prices are again on the rise, geo-political developments in the middle-east, portfolio diversification as everything is moving higher from equities/ commodities/ bond yields/ U.S. dollar, explained Pranav Mer, Vice President, Equity Brokerage Group (EBG) – Commodity & Currency Research, JM Financial Services.Pranav Mer however, don’t expect a bigger correction in prices immediately. “Possibly of a 3-4% and some consolidation or a sideways move is expected. However, the underlying trend remains positive and prices are poised to test Rs 75,000 per 10gm (without GST) in the short term, he said.
Jewellers from rural India are filling more pinch than those in the urban area as the agrarian community is not spending on gold, an important asset class for them. Post-harvest they generally buy gold but high prices are keeping them away. Rural India accounts for 60 per cent of India’s annual gold consumption of 850 tonnes.
Vaibhav Saraf, Director of Gorakhpur-based Aisshpra Gems & Jewels said “Demand from rural market is slow. With the metal at an all time high, sales have gone down volume-wise as the budget of the consumers has not gone up in line with metal rates. Also, the customers are scared to carry jewellery even with invoices due to moral code of conduct in place for the upcoming Lok Sabha elections.”
