Danika Dalal, a housewife from a western Mumbai suburb, had booked a 10g gold chain on August 1 with a neighbourhood jeweller, priced at Rs 25,000.
It was a stretched budget for her and she reluctantly agreed to pay the Rs 20,000 advance, with the remaining Rs 5,000 to be paid at the time of delivery on August 10.
At the time, the price of gold was quoted at Rs 23,150 per 10g in Mumbai. Unable to get together the balance Rs 5,000 by the due date, she delayed her visit to claim the chain.
"This was an opportunity the jeweller was looking for. I went to take delivery on August 12, two days after the deadline and they asked me to revert after five to six days," she complains.
"Now, on August 20, he refused to deliver at the price it was booked. They are asking for another Rs 5,000 for the same ornament."
With the price of gold setting a new record every alternate day, jewellery makers and retailers have started asking customers to pay for the ornament on the basis of the price of gold on the day of delivery, instead of the earlier agreement on the day of booking.
Generally, jewellers book new orders from customers and hedge their gold risk in the physical market for the quantity equivalent to the order for delivering the ornaments in an average of 10 days.
Since the price of gold has been advancing between the two dates, jewellers do not want to lose money in the rising market.
"If the customer fails to take delivery or the jeweller to deliver on the stipulated date, the contract expires.
"Then, it becomes the jeweller's prerogative whether to deliver the gold ornament at its booking price or with a revised high price," said Nilesh Parekh, chairman of Shree Ganesh Jewellery House Ltd, a Kolkata-based gold and diamond jewellery manufacturer and retailer.
The price of standard gold has risen 21 per cent or Rs 4,825 per 10g so far this month, enticing jewellers to take maximum benefit from the rising market.
"Jewellers are in a profit-making business. They would not like to lose an opportunity to make money," says Parekh.
In this situation, jewellers would prefer customers to default. Therefore, they purposely extend the date of delivery despite the ornaments being ready in time, according to a local jeweller.
The continuous rise in gold prices has helped speculative activity in the metal, evident from the open interest in the near-month contract on the Multi Commodity Exchange.
OI for the contract expiring on October 5 shot up to 12,930 kg on August 20 as compared to 12,579 kg a month earlier. During the period, gold jumped to Rs 27,954 per 10g from Rs 27,550 per 10g a month before on the MCX.
"Customers book gold today for the next generation, amid fear of availability, which is helping price rise.
"Since gold's availability is expected to remain low due to poor recoverable reserves and the lack of new mines, consumers are booking the metal afresh," said Ajay Mitra, managing director (Indian sub-continent), World Gold Council.
This is the time Indian jewellery makers book raw materials for preparing new designs and collections for the upcoming festive season -- Diwali, Christmas, New Year, etc.
"We hope our business to grow by 25-30 per cent this year, as the gold price alone has supported a rise in turnover by at least 25 per cent," said Parekh.
PTI adds: Gold surged to a fresh all-time high of Rs 28,540 per 10g in the bullion market on Monday on sustained buying by stockists and investment-driven purchases, fuelled by the bullish trend in international markets. Spot gold hit all time high to trade at $1,893 an oz in London.