The Hindu : Front Page : Price of gold shoots through the roof

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Thursday, Nov 01, 2007
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Price of gold shoots through the roof

M.L. Melly Maitreyi

Drastic fall in sale of jewellery despite Deepavali being round the corner

HYDERABAD: The price of yellow metal is on the rise, once again. With the price of gold crossing the ‘10 k-mark’ per 10 grams, the mood is to wait and watch, notwithstanding Deepavali ahead.

City jewellers have reported a fall in sale by 30 to 40 per cent when compared to sales last year during the same period. “Market right now is bad,” admits Ashok Gupta of Totaram Jewellers. “The mood among the buyers is to wait,” he says.

V. Govindraj of Tanishq says rising gold prices can be a cause for concern in India where 80 per cent of sales are for jewellery and 20 per cent for investment.

But for occasions like weddings people would buy jewellery despite the price barrier. When buying gold is a sentiment as it happens during festivals, the quantity purchased is less.

If price rise is steady it doesn’t impact buyers, but they do postpone purchases when the prices fluctuate wildly, he explains.

The appreciating rupee value, however, has cushioned the Indian customer. Compared to conversion rate of Rs. 44 per dollar last year, now it is Rs. 39.50. “At the old conversion rates gold would have already touched Rs.11, 000,” avers Mr. Gupta.

Gold touched the Rs. 10,000-mark a year and a half ago but the international gold price was then $ 725 per ounce as against present price of $ 785, but the dollar was then ruling at Rs. 46, recalls Mahavir Chand of Panna Jewellers.

To go up further

“This is the right time to buy as gold prices may not come down. By March/April, 2008 my bet is a gram would cost between Rs.1,050 and 1,060 as against present price of Rs.1,018 a gram of 24 carat gold,” advises Mr. Gupta.

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