Coins find market as gold loses gleam

Despite the yellow metal not getting any cheaper, companies are optimistic about greater offtake of gold coins during this Diwali. Gold coins are now being used for promoting sales of items like watches to jewellery and also for gifting.

Corporates and financial institutions have stepped up gold coin promotions during the festive season. HDFC Bank has tied up with CRY for the gold coin promotions, while Reliance Money, the Anil Ambani Group's brokerage firm, has introduced smaller denomination coins in the market. For instance, 0.5 gram gold coins are being sold for Rs 500.

Chitra Pandeya, head of HDFC Bank's liabilities-payment product group said, "This year we are seeing increased customer interest despite rising gold prices. The bank expects a 200 per cent increase in gold coin sales on the back of optimistic customer demand and an increase in the distribution network."

Steep price rises in the last couple of months have affected demand for the yellow metal but gold coins are being used is promotions as a way of pushing sales of the metal overall. Prices have gone up by more than 15 per cent in Indian market in last two months.

Apart from financial institutions, even jewellery brands like Orra are giving away coins along with jewellery purchases.

Vijay Jain, CEO, Orra said that giving gold coins as freebies "" buy jewellery worth Rs 25,000 and get 2 gold coins and 10 silver coins free "" is the company's way of demonstrating value to customers.

"The company does not want to discount the brand, but introduce value added offers to consumers. The escalating prices have made gold and silver coins an investment avenue. Buyers can also utilise coins as a gifting option for other occasions like weddings," said Jain.

Meanwhile Titan has introduced free gold coins along with its Nebula brand of watches.

"Even corporates have shown inclination towards lower denomination coins for gifting purpose," Sudip Bandyopadhyay, CEO, Reliance Money, said. Keyur Shah, joint director, World Gold Council, added, "Gold coins have become popular as they add value to an offer. This season corporates have increased gold coin promotion spends by at least 25 per cent."

Last year, demand for gold in India was 800 tonnes. Coins account for 10 per cent of the total demand, the rest being jewellery and industrial applications. In the same period, ICICI Bank sold 2.5 tonnes of coins while Tanishq is estimated to have sold nearly one tonne.

However, volatility in gold prices dampened the demand for gold coins on Dhanteras, a day considered auspicious for gold purchases.

Jewellery retailers said demand for coins dipped by at least 25 per cent due to steep gold prices, which were hovering around Rs 10,500 on Dhanteras. They are, however, optimistic about the market picking up if prices stabilise at the onset of Diwali.