Gold sales declined by half over the past fortnight, as consumers shied away from fresh purchases in anticipation of a further price decline. Scrap recovery, however, surged by 10 to 15 per cent, as consumers felt the current high price was an opportunity to cash in on their holdings.
“Purchases have dried up as consumers await price decline,” said a leading city-based jeweller, adding sales had plunged to 140-150 kg a day, compared to an average daily volume of over 300 kg.
The yellow metal is holding high in India because of a depreciating rupee. Since, the policy makers have already shown interest in bringing down the rupee’s value against the dollar, prices of import-oriented commodities will certainly come down with the appreciation in rupee. Apparently, gold will be the first commodity to get the benefit.
Gold prices in rupee terms fell 1.49 per cent on Saturday to settle at Rs 28,470 per 10 gm, against a 5.46 per cent decline in dollar terms. At the Zaveri Bazar here, the yellow metal was quoted at Rs 28,900. In London spot market, gold closed at $1,683.53 an oz yesterday, against $1,780.82 on November 15.
Silver is also facing least interest from buyers. In Mumbai, it fell 3.88 per cent on Saturday to settle at Rs 55,270 a kg, compared to Rs 57,500 two weeks ago.
In dollar terms, the white metal plunged 9.50 per cent to close at $31.81 an oz, compared to $34.54 two weeks ago. The rupee fell 3.14 per cent to settle at 52.26 a dollar on Saturday, compared to 50.67 on November 15.
“Consumers abstain from fresh purchases in anticipation of a further correction in prices. Since the extent of price fall was meager in India compared to London, consumers feel the possibility of further price decline in coming days,” said Ketan Shroff, director of city-based Pushpak Bullions.
Since nervousness persists in all other avenues, including real estate, equities, metals and energy, consumers assume the same sentiment will percolate in precious metals, which has not happened so far. Hence, chances of a steep price correction could not be ruled out, he said.
If the trend continues, overall gold consumption in India will remain stagnant or decline. The World Gold Council had said in a recent report demand in India would escalate with the onset of wedding season.
“A bigger part of investment and consumer money in precious metals is also going to fixed deposits, which not only offer higher and assured returns, but also guarantee safe withdrawal of principal as and when consumers want. So, consumers are lured with the fixed deposit option by selling a portion of their gold stocks at the current high price,” said Lalit Jagawat, proprietor of Nakoda Bullions, a bullion dealer.
The wedding season for jewellers has already started, as they require gold and silver three months ahead of the actual commencement of the season to prepare designs and artifacts. But, the post-Diwali lean season continues even on Saturday. Gold sales, however, are likely to rebound with a fall in prices.
