A Glittering Performance as Gold in India Falls

Antique Indian Gold Jewelry and indian wedding jewellery is more popular than ever as gold in India glitters again as prices fall.

Published: Wednesday, 20 August, 2008, 01:14 AM Doha Time -

The glitter is back… demand for gold is on the rise ahead of India’s festive season when indian wedding jewellery is in high demand.

Metropolitan areas like Mumbai typically account for 200 to 500 kilos of daily gold imports in the high season.

60-70% of india gold is purchased in rural areas. Gold Bullion dealers say this is because agricultural income is not taxed and because discerning women prefer investing in gold as a security in rural areas.

The price of gold in India, the largest market for the metal in the world, may have started to climb up slightly after dropping to a multi-month low last week, but there has been no letup in demand, ahead of the festive season.

Such has been the demand that both traders of the yellow metal and jewelers said they may even run out of stocks, which could send the price of gold soaring again before the start of the festive season in October.

“In the last one week, we did three times more sales than what we were clocking in the first half of this year,” said Anantha Padmanaban, partner at Nathella Anjaneyulu Chetty and Son, one of the largest jewelers in Chennai.

“If the demand for gold in India continues like this, we jewelers will run out of gold stocks,” added Padmanaban, whose jewelry shops attract hundreds of customers every day.

“I am getting a lot of inquiries from people wanting to buy gold after the fall in prices,” echoed Mumbai-based jeweler K H Bhat.

After falling to multi-month lows the week before, gold prices rose in India after a weakening of the US dollar and a rise in crude oil prices.

The metal had dropped to as low as $772.98 an ounce in Singapore on August 15 - the lowest gold price since October.

After that, reports from Singapore said gold for immediate delivery gained for the first time in the last three trading days until Monday, the price of gold rose by as much as $11.25, or 1.4%, to $798.95 an ounce.

Last week gold prices in India had fallen below Rs11,300 per 10g, before edging up slightly on Monday. During the slump, HDFC Bank, for example, was asking for Rs11,285 to buy and Rs11,676 to sell the gold.

At the retail level, however, Monday saw Mehrasons, one of the largest jewelers in New Delhi, quoting Rs10,535 per 10g for 22 carat gold.

“Jewelry prices have fallen now. And given the way prices of gold are fluctuating, I plan to buy indian gold jewelry this week,” said Kashma Acharya, a Mumbai housewife and a regular buyer of indian gold jewellery.

According to the World Gold Council, the retail investment demand for gold also followed the same trend as that for gold jewelry.

As prices started rising in the second quarter, the demand fell by as much as 41% to 43.4 tonnes.

“But we are now seeing strong and growing demand at lower prices of gold in the world’s largest gold buying market and believe international investment demand in the retail gold coins and bullion market will also strengthen,” the council said.

The sharp fall in the price of gold, brought back smiles on the faces of both buyers and sellers in India. “I certainly hope the prices of gold fall further as this is boosting demand,” said Ajay Mehra, the managing director of Mehrasons. “The spot gold price spike had hit our sales hard and a correction in gold prices was long overdue.”

But the volatility in the gold market is a cause for worry. “The gold market price situation is now crazy. The fluctuation in gold prices are affecting our business,” Pankaj Parekh, regional chairman of the Gem and Jewelry Exports Promotion Council, said in Kolkata.

“People are buying gold and in particular, gold indian wedding jewellery at this price, but it all depends on the gold market price,” warned Hiren Soni, a bullion trader in Mumbai. “You can’t make a judgment now on future rates of gold in India as one of the key determinant of prices of gold is the US dollar.”

Nathella’s Padmanaban also said the situation was volatile. “We hope the gold prices settle at around Rs1,020 per gram. A price of Rs1,000 is a psychological mark. If gold in india breaks that mark then you can call it a crash.” – IANS

Have You Seen the Jewel-of-the-Month Yet?

Return to top of Gold in India

Return to Antique Indian Jewelry

Return to Antique Jewelry Investor