Gold fails to attract buyers despite price fall

Rapid fluctuation in gold prices has failed to attract buyers, leaving jewellers an unhappy lot. The yellow metal, driven by international forces, has witnessed a reduction of more than Rs 500 per 10 gm in the past four days.

However, customers failed to turn up, resulting in an increased number of people taking to forward trading and even more because of shradhs, said jewellers.

The prevailing price in local markets today was Rs 9,090 per 10 gm against the nearly Rs 9,600 last week. Gold prices, in the past one year, have witnessed an increase of more than Rs 3,000 per 10 gm.

The initial rise gave a setback to the market as consumers waited for rates to decline. Following the initial increase, trading in yellow metal started growing due to high returns as a result of continued upward trend. The demand for jewellery, hence, according to local dealers, is less than one-fourth of what it was a year and a half ago.

Speaking to Business Standard, Vineet Dhanda, Organising Secretary, Ludhiana Jewellers Association rued that we are suffering heavily as demand has reduced to less than 20 per cent of what it was around a year and a half ago.

"Fluctuations are occurring due to forward trading and if the same continues this festive season would provide no relief to jewellers from losses. Even after this reduction we did not get buyers.''

"Around 40 per cent of the total buyers, prior to this recession, are estimated to be those who bought gold for investment purposes. While their demand is almost nil now, demand from consumers who purchased for cosmetic reasons too has ebbed. Besides, shradhs these days are a contributing factor to reduced sales,'' informed Dhanda.

Forward trading in bullion has risen not only at international level but in this region too. As per estimates a daily trading of Rs 1,000 with the city's share of more than 25 per cent is being done in this region. Forward trading requires very less money and undoubtedly volumes in this region have also increased.

Komal Jain of Jainsons Jewellery House on Rani Jhansi Road said that as it is very easy to get into forward trading, people prefer that instead of physical purchase and sale.

"With speculation dominating trading internationally, there is sharp volatility and the ultimate losers are jewellers."