Jewellery demand dips as gold prices soar

The retail gold demand in the domestic market indicates a mixed trend despite the beginning of the festive season, even as the yellow metal price nears a record level.

Consumer demand for gold jewellery in south India is lacklustre, while it is range-bound in the northern and western parts of the country. Retail gold jewellery demand usually picks up with Raksha Bandhan, a festival that symbolises a strong bond between brothers and sisters.

"Although a clear picture is yet to emerge, initial indications are that the retail gold demand has softened in the South, the heart of jewellery sales in the country, and is range-bound in the West and the North," said Ajay Mitra, managing director, Indian sub-continent, World Gold Council (WGC).

Stockists are piling up the yellow metal as its prices soar. But consumers are abstaining from purchases following higher prices.

Spot gold in New York rose to $714.00 an ounce before falling to $708.85-709.60 on Wednesday against $711.90-712.50 on Tuesday. In the domestic spot market, standard gold closed at Rs 9,340 per 10 grams, up by Rs 50 over the previous close. Pure gold too closed high at Rs 9,390, up by Rs 50 over Tuesday's close.

Bhargav Vaidya, a precious metals analyst, sees a renewed consumer demand only after Ganesh Chaturthi, the birthday of Lord Ganesh, occurring on September 15.

The rupee appreciation, however, has contained the intensity of the yellow metal price rise, bringing the rates within the reach of consumers at around Rs 9,500 per 10 gram, which is below the Rs 10,000 level around the same time last year.