As the price of gold hit a lifetime high, bullion dealers have started luring customers with 1 per cent discount for rolling over their working capital, to remain afloat in this business.
Against the actual purchase cost from banks at Rs 34,200 per 10 grams, bullion dealers are selling gold at Rs 33,893, exclusive of the 3 per cent GST levied on it.
Further, bullion dealers have also started offering gold without a bill to customers, at nearly Rs 1,000 less than the actual cost of purchase from banks.
Standard gold jumped 1 per cent to hit a lifetime high of Rs 33,895 per 10 grams in the physical market at Zaveri Bazaar (Mumbai) on Friday, compared to its previous closing of Rs 33,559.
The sharp increase in gold prices across India followed the trend in global markets after the Fed’s statement on Wednesday. This gave a signal of a slowdown in the US economy, resulting in the dollar plunging to its biggest 2-day loss in a year.
“Weak global economic forecast, expectations of a rate cut by the US Fed, and increasing geo-political tensions between the US and Iran has led to the recent rally in gold prices. We expect the rally in gold to continue for the bullion to trade at $1,380-1,440 an oz by the weaker dollar index. This will translate to Rs 35,000 per 10 grams in India, in the near term,” said Pritam Kumar Patnaik, head (commodities), Reliance Commodities.
Gold futures for delivery in August gained by 0.35 per cent on the MCX for trading at Rs 34,150 per 10 grams in early evening trade.
The current spurt in gold prices has, however, reduced jewellery sales by 50 per cent as customers prefer to exchange old jewellery with new ones with a mere making charge on it. Also, scrap jewellery sales have intensified in the last two days.
“”There has been a sharp increase in scrap jewellery sales in the last two days. Customers prefer to wait for a decline in gold prices for fresh orders,” said N Anantha Padmanaban, Managing Director, NAC Jewellers, a Chennai-based jewellery retailer.
Also, with the wedding season coming to an end, jewellers offer discount on making charges to attract cutomers’ footfalls. While Tribhovandas Bhimji Zaveri (TBZ) offers upto 50 per cent discount on making charges, others like Tanishq offers free movie vouchers for sales over Rs 5000.
Going back globally, however, gold price hit the high of $1405 an oz on Friday but slipped in early afternoon London trade to $1397 an oz following surge on crude oil prices.
“Overnight surge in crude oil prices have weighed on Indian rupee as it weaken the most among Asian currencies. In Near term, rupee is having resistance around 69.03 and support at 70.01. American Dollar lost traction as profit taking after tensions between the U.S. and Iran. A gauge of the dollar was still set for its worst week since February 2018,” said V K Sharma, Head, Capital Markets Strategy, HDFC securities.
Gold futures for delivery in August gained by 0.35 per cent on MCX for trading at Rs 34150 per 10 grams in early evening trade.