As gold price peaks, old jewellery glitters

The price of gold in Kerala has touched the highest-ever level at Rs 910 per gm (Rs 7,280 for one sovereign) on Wednesday from Rs 902 last week in the local market before hovering below Rs 900.

As global market has peaked to new heights and major Indian markets are on a bull run, major city jewellers expected a further rise in the price of yellow metal.

It won't long before the price skyrockets to Rs 1000 a gram, according to city jewellers. Speaking to Business Standard, a local jeweller even predicted the price of one sovereign peaking to Rs 10,000 mark within a few months.

In view of the ongiong wedding season in the state, the demand for gold is at its peak in Kerala. However, the major transactions revolve around exchange of old jewellery for new ones with the price of gold reaching new highs. Consequently, there has been a drop in the sale of gold ornaments by 20-30 percent and local jewellery showrooms face a slump.

Toby Joseph, a city jeweller, said that there had been considerable increase in the sale of old ornaments as it would fetch huge margin for the customers. "But, most of the jewellers are reluctant to take old jewellery in exchange for cash."

Although, a gram of gold costs Rs 910, value addition by jewellers imposes additional burden on the customers. For different type of jewellery, traders charge 8-18 percent value addition. As per the prevailing price, an ornament weighing one sovereign (8 gm) should be Rs 7,800. But, jewellers sell it for Rs 8000 in the name of value addition.

A jeweller told Business Standard that there was an unholy practice in jewellery business in order to attract customers. Waving of sales tax is one of the ways of increasing their business as most of the customers would not insist on a bill.

But, the customers who want to sell their old ornaments are at the receiving end as jewellers are unwilling to pay the market price citing all sorts of reasons. While the market price is Rs 910 a gram, customers selling old ornaments get only Rs 800 for gram. Their contention is that they can extract only 80-85 percent pure gold from old jewellery.

Though customers suffer double loss when they exchange old jewellery, they are not unhappy as the present gold price is very high. Six months ago, the price of gold was Rs 600 per gm.