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| Spiralling prices take toll on gold sales |
| Dilip Kumar Jha / Mumbai Jul 28, 2009, 00:09 IST |
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Gold is gradually losing its charm as the preferred investment avenue for Indian consumers because of rising prices. Investment advisors are keeping their fingers crossed over any relief in price spiral for the yellow metal while retail consumers are staying away from fresh deals.
As a consequence, gold sales in an otherwise busy Zaveri Bazar in Mumbai came down gradually last week, reaching ‘nil’ on Friday as the price escalated to Rs 15,020 per 10 gm. The price rose Rs 80 during the week and has gone up 12.76 per cent from Rs 13,320 a year ago.
Analysts attributed the price spurt to gold’s growing popularity in traders’ fraternity as a safe investment during the current global economic turmoil.
Meanwhile, the dollar, another safe investment avenue, has also strengthened against the rupee by 12.96 per cent to 48.21 over the year, amid rising demand for the US currency from overseas credit settlers.
In the Zaveri Bazar, however, jewellers were seen mulling ways to keep business afloat. “Business has declined over 90 per cent since prices started strengthening last week,” said Suresh Hundia, president of the Bombay Bullion Association.
Hundia warned that if prices continued to move upwards, India’s gold imports might decline significantly during the current year. Imports in July this year are expected to be down to 4-5 tonnes as against total imports of 68 tonnes in July 2008 and 34 tonnes in July 2007.
The country imported a little over 3 tonnes this month, Hundia said. Gold imports have been stagnant so far this year. The country imported 51.6 tonnes during January-June 2009 compared with 139 tonnes in the same period in 2008.
Meanwhile, Ketan Shroff of Pushpak Bullions in Mumbai refuted the World Gold Council’s claim that higher gold prices had no significant impact on buying by consumers.
Early this week, WGC had said, “The sustained high price for gold is not having a significant impact on trade demand for gold in the run-up to the wedding and festival demand in India.
Although higher prices are leading to some consumer hesitancy in the short term, there are indications that trade buyers expect the high price environment to continue and therefore remain committed to building stock.”
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