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While gold markets were gripped in panic during last week, diamond industry breathed a sigh of relief due to recovery in rupee, which helped diamond players to import diamonds at lesser cost.
Rupee hit its highest level in seven weeks recently and touched Rs 53.77 against a dollar in intra-day trade. Also, taking the cue from international markets, Indian currency is believed to strengthen further.
"A stronger rupee will help diamond players to import diamonds at cheaper rates. At a time, when rough diamond prices have surged significantly over the past one year, it is a sigh of relief for the diamond industry that rupee is finally strengthening," said a diamond exporter from Surat.
The Solitaire Price Index, which shows the average price of all categories of diamonds showed 1.81 per cent increase in prices during April so far. The index is compiled by Divine Solitaire.
Gold prices in the international markets, dropped sharply during Friday to Monday (April 12-15), shedding the most to touch two-year low levels. The yellow metal breached the US $ 1,350 an ounce level in the sharp fall.
"Fall in gold prices triggered panic thereby prompting heavy selloff by funds and dealers. There are no buyers at present. The market is shaky and we may see prices to drop further from here," said Suresh Hundia, former president of Bombay Bullion Association (BBA) and owner of Hundia Exports a Mumbai-based gold trading firm.
However, the situation was stable in diamond industry as compared with gold and silver. Demand for diamonds remained stable, even as precious metals continued to slide. "Jewellery sales affected due to sharp fall in gold as people adopted wait-and-watch strategy. However, diamond demand continued to stay stable for jewellery and loose," said an official of Surat Diamond Association (SDA).
According to trader sources, gold prices recovered on Thursday from its recent lows of around Rs 25,270 per 10 grams, cheapest since 2011. Gold prices have fallen by close to 17 per cent so far during this year. "Prices have recovered and there is increased buying of gold as of now. People are no more under panic. However, diamond sales are not much affected due to slump in gold prices," said an Ahmedabad-based jewellery retailer.
