Discounts and incentives are attractions jewelleres are offering along with new designs to woo customers to boost sales ahead of Diwali.
Bullion may settle with limited upside potential
As gold prices turn prohibitive, traders fear a drop of as much as 50% in sales over the previous season.
Gold, which was hovering around $1,321 an ounce in January 2019, has already breached $1,600 per ounce in the past few sessions to a seven-year high.
India's gold demand increased by 19.2 per cent to 76.1 tonne during the April-June quarter this year, largely due to low base effect, owing to the nationwide lockdown that hit economic activity last year, the World Gold Council (WGC) said in a report. The overall gold demand during the second quarter of 2020 calendar year stood at 63.8 tonnes, according to the WGC's 'Gold Demand Trends Q2 2021' report. In value terms, India's gold demand witnessed 23 per cent growth during April-June quarter at Rs 32,810 crore, compared to Rs 26,600 crore during the corresponding period of 2020.
In dollar terms, however, gold prices jumped by 26 per cent this calendar year, following sharp jump in hedge funds' long position
Gold looks cheap compared to the stock markets that are highly overbought at the moment.
Dealers expect prices to fall further, owing to an impending rate hike in the US
In 2014, gold prices had fluctuated between Rs 27,000 and 30,000/10g.
Marketmen said the persistent fall in gold prices to increased selling by selling after the Reserve Bank eased curbs on import of the yellow metal, allowing select trading houses, in addition to already permitted banks, to procure the precious metal to boost exports.
Globally, gold prices fell by 0.3 per cent to $1,194.10 an ounce in Singapore on speculation that a rally to a two-week high will erode demand as dollar strengthens.
Traders said slackened demand from jewellers and retailers and absence of cues from the global markets as US market are closed today on account of 'Labor Day', kept pressure on gold prices.
After rising for two days, gold prices went down by Rs 100 to Rs 26,850 per 10 grams at the bullion market on Tuesday, tracking a weak global trend amid slackened demand from jewellers.
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The price of gold has risen 10.63 per cent this year -- from $1,205.65 an ounce at the beginning of the year to $1,333.9 on Monday.
The inflows meant assets under management of gold ETFs climbed by over 4 per cent to Rs 13,503 crore at the end of August from Rs 12,941 crore at July-end.
Notwithstanding how the current impasse is solved, at some point in the future, Russia will realise that just as centuries ago it developed the paradigm of securing its heartland's safety through annexing vast buffer zones between itself and the enemy, a more modern security is possible only through friendly relations and sustainable peace, observes Shyam G Menon.
Gold and silver became costlier in the country following the international price rise over the expectations of negative interest rates in the US, the rising trade tensions between the US and China and the weakening of the rupee.
Regular investment in gold-linked financial instruments will safeguard against price fluctuation and do away with storage cost.
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Gold in Singapore advanced as much as 1 per cent to $1,202.08 an ounce.
In Delhi, gold of 99.9 and 99.5 per cent purity fell by Rs 130 each to Rs 30,600 and Rs 30,400 per 10 grams, respectively.
Traders said apart from subdued demand from jewellers and retailers, a weakening global trend on easing of tensions in Ukraine mainly kept pressure on gold prices.
Gold prices extended losses for the fourth straight day by losing Rs 325 to Rs 31,100 per ten grams on stockists selling.
Silver coins remained unaltered at Rs 69,000 for buying and Rs 70,000 for selling of 100 pieces.
The US is the largest consumer of gems and jewellery in the world contributing nearly 40 per cent of global production. If India can tap the opportunity, its overall exports to the US could jump by 10 per cent to $ 11 billion this year.
Gold is often considered a 'hedge' against an economic uncertainty.
Globally, gold rose 0.16 per cent to $1,279.70 an ounce in London.
Traders said slackened demand at prevailing higher levels amid a weak global trend mainly kept gold prices while silver recovered on some buying from industrial units.
They have sought data from these companies on loss absorption capacity in case of a fall in gold prices and higher defaults.
Despite returns from gold down over 5% in the past three months, it is a good idea to keep this asset class in your portfolio.
Traders said sustained buying by stockists and investors shifting their funds from melting stocks to bullion mainly kept gold prices firm for the fourth-day.
Bullion merchants said besides increased buying by jewellers and retailers to meet festive season demand, costlier imports due to weakening of the rupee, led to the rise in gold prices.
Traders said besides sustained selling by stockists, a weakening trend in overseas market mainly weighed on gold prices.
Confidence had ebbed in the last few years due to default by some errant domestic retailers and exporters. Moreover, many jewellers are believed to have diverted the fund collected through monthly deposit schemes to pay 'mark-to-market' margins on various loans.
Demand for investment instruments is expected to be more than jewellery.
Globally, gold lost 0.8 per cent to $1,154.60 an ounce.
Smuggled gold, which is selling sharply lower than the spot market price, is also responsible for discounts not ending. Some consumers are selling high amounts of gold.
Traders said the fall in gold prices was mostly in line with a weak trend in the global markets as signs of easing tensions in Ukraine curbed demand for the precious metal as a haven.
As of now, the custom duty on gold is 10 per cent.
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