Record high gold prices take sheen off jewellery sales

It shot up too quick. Now, we have to wait and see for how long this price will hold. It is likely that the price will not come down too much as it is entering a new territory. We expect 30-40% drop in retail sales. - Praveen Kumar, Secretary, Twin Cities Jewellers Association, tells Bizz Buzz

Hyderabad: The price of gold sprung a surprise when it surged unexpectedly. In the last few days, its price reached an all-time high of more than Rs70,000 for 10gm for 24 carats. Facing the heat, jewellery retailers in Hyderabad are witnessing a drop in the volume of sales by 30 to 40 per cent. However, they are bullish that a slight correction in price of up to Rs 65,000 will fuel the sales again, as buyers anticipate the price to shoot up again.

“It shot up too quick. Now, we have to wait and see for how long this price will hold. It is likely that the price will not come down too much as it is entering a new territory. Unless it is for a marriage, no one will come forward to buy during this period. As a result, the sales will go down by 30 to 40 per cent. We have to watch for the next one week as it is not healthy for any asset class to rise 15 per cent in a month,” Praveen Kumar, Secretary, Twin Cities Jewellers Association, told Bizz Buzz.

Kumar and other retailers in the city are waiting for the price to come down a bit this month as it will result in an increase in sales. “As customers have understood the trend in gold prices, they will make their purchase even if there is a slightest correction in price as they anticipate that the price will go up again,” the Secretary pointed out.

Advising customers to make small purchases on a continuous basis, Kumar said, “my investment manual states that if an investor buys one gram of gold every month irrespective of its price, they will retire a crorepathi.”

Family-owned gold retailers and wholesalers say it’s a temporary dip in sales and gold will be back in demand soon.

Divya Rakshita Naineni of Sri Rakshita Diamonds and Jewels, observes that both the customers and retailers are on wait-and-watch mode, expecting the gold price to settle lower. “Even my customers have conveyed their message that they will place their orders if the gold price comes down,” Naineni added.

Has gold ever lost its sheen? History has been the witness…though gold prices have been on upward trajectory, it never lost its sheen for long. Elections or global influences are only temporary speed breakers, says another retailer Manoj Kumar.

According to him, the price of gold is likely to reach Rs75,000 by next month, and more than Rs 80,000 by Deepavali.

Manoj went on to say: “Gold is gold, has any customer been in loss after buying it for Rs50,000, few years back. Right now, the price will hover around Rs70,000 only. As per one’s buying power, customers should go ahead and buy even if it is a gram or two. It might come down by few hundred’s but after that once it starts surging, there will be no control over the price. 25 years back gold was available for Rs1,000, later it went on increasing from Rs6,000 to Rs9,000. Suddenly, it jumped to Rs15,000. Then, in the market there was news that its value would drop. But that did not happen, now it has reached Rs71,000.”