This season, Rs slide sends gold soaring

Shiv Kumar
Tribune News Service
Mumbai, October 19

The demand for gold and jewellery is likely to be dull in the ongoing festival season as gold prices rise in the wake of the depreciating rupee.

Gold prices have increased sharply in the past two months as the rupee began falling against the dollar. The price for 22-carat gold has shot up sharply from Rs 28,760 per 10 gm in August to more than Rs 31,000 on Thursday on the occasion of Dasehra. The gold trade is expecting prices to even cross Rs 32,000 per 10 gm when the demand for the yellow metal peaks during Dhanteras and Diwali next month.

“People are not buying gold in large numbers and are happy with small amounts of the metal,” Akshay Popley, owner of a jewellery store at Zaveri Bazaar in South Mumbai.

Sentiment has also been affected by the sharp fall in the stock markets, according to jewellers. “Many traders have lost money after the markets fell in the past few weeks and people are not placing orders for jewellery,” says another jeweller.

On the other hand, traders say, the recycling of gold is increasing. People are selling their old jewellery to buy ornaments of more contemporary designs.

Market analysts feel that investors have more options these days and are moving away from gold. “In the past, people used to shift their savings to gold whenever the stock markets turned choppy. However, due to sustained advertisement campaigns by the Mutual Fund industry, people are continuing or increasing their SIPs. Thus, there is less money moving into gold,” says Prashant Datar, an analyst with a Mumbai brokerage.