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As Gold Dulls...

Friday, April 19, 2013
By Mayura Shanbag

Housewives Make A Beeline To The Jewellers

The fetish for gold in India will never subside… And if the long queue outside jewellers’ shops and the sudden rush to buy gold, after the current price correction is to be believed then one can see the love for the yellow metal to be very much there.

Jewellers who till now were faced with subdued or miniscule retail demand are making most of the situation with some demanding cash only for transactions and some telling the housewives that the gold coins in small denominations  are out of stock and they need to buy jewellery only.

“My jeweller told me that he will not accept card payment or credit payment and asked me to do entire transaction in cash,’ said Jyoti Oneil, a housewife from Mulund. “He also refused to sell me gold coins of smaller denomination stating that they are out of stock,” she said.

Jyoti is one of the many housewives who had rushed to buy gold after the recent fall in gold prices. Gold prices fell by 20% in the last one week. The recent fall has been witnesses after a decade long rally in gold. Gold closed at Rs 25,775 per 10 gram in Mumbai yesterday.

However, there are some housewives who are still playing the wait and watch game anticipating that there will be further correction in prices as mentioned by some reports.

“I want to buy gold but I am waiting for prices to fall further. I read reports that gold may get cheaper by another Rs 1000-Rs1500 or more by May,” said Gargi Bhide, another home maker from South Mumbai.

Incidentally, according to Deep N. Mukherjee, Director,  Corporate Ratings, India Ratings and Research, the price correction may possibly increase the volume demand for gold jewellery which fell 19% over 2010 to 2012 due to a sharp rise in gold prices (around 55%).

However, he expects the discretionary spending to be impacted as buyers of gold for investment purposes would postpone their purchases until gold prices stabilise. “Operating margins are also likely to be impacted by the decline in prices as some retail jewellers quote making charges as a percentage of raw material cost,” said Mukherjee.       

Gold is expected to be in the range of Rs 24,000-Rs 29,000 per 10 gram in the next 6 months feels Prithviraj Kothari, Directror, Riddhi Siddhi Bullion Limited. Kothari also says that he expects demand to increase from here on, “as the prices have corrected in the range of 20-25% after a wait of 11 years,” he added.

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