Heavy gold rush as price slumps

Price decline leaves some jewellers worried that stocking gold would land them in losses, should prices keep falling going further
Suvanker Sen
Suvanker Sen

Plunging of gold prices below Rs 25,000 levels per 10 grams saw customers queuing the stores and proved advantageous for jewellers as sales of the precious metal jumped about 20 per cent to 25 per cent in volume terms.

“A sharp fall in gold price came as a boon for jewellers as sales jumped about 20 to 25 per cent in volume terms. Sales have increased due to the sharp dip in price,” said Suvanker Sen, executive director, Senco Gold.

While Chandra Surana, proprietor, Bhuramal Rajamal Surana Jouhree, said in a word falling prices is “good in all means”. Namit Dave, a gold analyst feels gold sales in grammage terms are likely to increase with prices tumbling down.

On the other hand the price decline has left a section of jewellers worried that stocking gold would land them in losses, should prices keep falling going further.

The sudden fall has led to panic among importers and investors. This fall has prompted retailers to look forward to more than fifty percent increase in the sales of the metal, added Sen.

“Falling gold prices are negative for jewellery companies as they now take the hit on inventory gains or losses and are unable to use the benefit of gold on lease available earlier,” said Arun Kejriwal, director at Mumbai at Mumbai based KRIS Capital.

However Kejriwal says once gold prices stabilise, it would be beneficial for them but that is a couple of quarters away. “There is now fear about where gold prices would stabilise,” he says.

While Kaushlendra Singh Sengar, founder and director, Dhanpurna Commodities, said falling prices is a bane for the industry as gold has lost its shine and investors have lost faith too. “People are afraid of falling prices,” said Sengar. However prices are likely to bounce back after bit correction, added Sengar.

Customers can now easily stock gold jewellery, concluded city jewelers.

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