Slide in gold price impels jewellers to restock

Jewellers across the country are replenishing their inventory with the slide in gold prices.

It is estimated that a fourth of the 225 tonnes of gold imported in the two months ahead of Diwali has been used for this purpose. There are an estimated 30,000 jewellers in the country.

Over past few weeks gold price fell to Rs 26,000 per 10 gram in India and $1,140 in international market. Today gold is trading around $1,200 per ounce.

When the prices were higher, several jewellers had offloaded their stock and this, it appears, is being replenished. A sector official said in the past one year, especially after the 80-20 rule came into effect (mandating 20 per cent re-export of any import lot), jewellers were not keeping big stocks, due to uncertainty on demand; a sectoral official said the average stock had been cut by 20 per cent since the level in early 2013. However, demand has been improving in recent months.

In April and May 2013, a little over 300 tonnes of gold were imported, which was historically high. New controls on import came in May. Analysis of data compiled by the World Gold Council suggests average net official import since the first quarter of 2010 till the second quarter of 2013 was 230 tonnes in each such period. Since the 80:20 rule, average quarterly imports as of the start of September were 105 tonnes.

However, in September and October, imports have averaged above 100 tonnes monthly. A large part of that was estimated to have used for replenishing of stocks by jewellers.

Haresh Soni, president of the All India Gem and Jewellery Association, said, “We understand the impact of higher gold import on the current account deficit and, hence, are asking jewellers not to push sales of gold for investment. Gold coins of only small denominations, i.e 5-10 grammes should be sold.”