Gold maintains its lustre in India
Mumbai-India (Oct 25) Darab Bajina, a 62-year-old accountant, was among a horde of customers who filled up a jewellery store in Mumbai last Tuesday afternoon.
He was trying to edge his way through the crowd to get to the counter so he could buy a gold necklace for his wife for about 30,000 rupees (Dh1,800).
“I’m buying because of Dhanteras,” he said, as another eager buyer pushed in front of him. “Gold’s a very good investment and the prices are low at the moment.”
Dhanteras marks the beginning of the five-day Hindu Diwali festival and is traditionally a popular day for Indians to buy gold.
The current festival and wedding season, along with lower prices, have been tempting buyers back into the market following slow demand for the precious metal in earlier months this year.
“I hope the trend continues over the next couple of months,” says Dilip Tulsiani, the manager of Dwarkadas Chandumal Jewellers in Zaveri Bazaar, a vast jewellery market in Mumbai. He explains that his sales are up about 50 per cent compared to two to three months ago, when business was slow. “Indians have always believed that gold is the safest investment. In Indian custom, one can’t get married without gold.”
Other retailers have had similar experience.
The year got off to a slow start with business down between April and June this year on the same period last year, according to Sandeep Kulhalli, the vice president for marketing and retail of the jewellery division of Tanishq, one of India’s biggest retail jewellery brands, with more than 150 stores across the country.
“Subsequent to that we have seen very positive numbers thanks to the gold rate softening,” Mr Kulhalli says. “I can say for the sure there has been a good growth so far in volume terms, in spite of a slow start to the first quarter of our financial year.”
Gold last week was at about 27,900 rupees per 10 grams in Mumbai, down about 10 per cent on prices last year.
“I think from customer sentiment, there is still an area for improvement,” Mr Kulhalli adds.
Tanisqh this time last year had stopped selling gold bullion coins to help the government reduce imports, but the stores are now selling gold coins again, so that is also boosting business, he says.
Trying to control the sale of gold coins was among a number of steps taken last year to curb gold imports into the country in an effort to help bring the current account deficit under control. The government also hiked import duties on gold to 10 per cent and made it compulsory for those importing gold to export 20 per cent. In May, the government slightly eased restrictions on gold imports.
India last year was overtaken by China as the world’s largest consumer of gold, as the subcontinent’s measures had an impact on gold-buying trends.
Consumer demand for gold in India in the second quarter of this year plummeted by 39 per cent compared to same quarter last year to 204.1 tonnes, according to data from the World Gold Council.
But the appetite for the yellow metal seems to be returning.
“The gold demand this Diwali mirrors the general optimism that has set in the economy, reinforcing the traditional faith in gold for the average household saver and the increased economic relevance of this asset class due to various uncertainties on the horizon,” says Somasundaram PR, the managing director in India for the World Gold Council. “Policy restrictions have had little impact on demand for gold, though sources of supply have increasingly shifted to unauthorised channels.”
Gold imports through official channels surged by 450 per cent last month to US$3.75 billion compared to the same period a year earlier, according to the commerce ministry.
Source: TheNational.ae
