Indian buyers going for smaller gold items
Gold may have breached the Rs 30k mark again, but buying by consumers, stockists and retailers continues, albeit in smaller denominations.
Posted: Wednesday , 08 Aug 2012
MUMBAI (MINEWEB) -
Gold has climbed above the psychological $542.94 (Rs 30,000) mark in India, but with the festive season starting and the marriage season set to kick off later this month, Indian consumers continue to buy gold despite the high price.
Retailers say some consumers are buying smaller items of jewellery and smaller gold rings, as an investment option with the fear that prices will go up further. ``People do make their annual jewellery purchases at this time. There is an innate tendency among many investors to secure investment in times of uncertainty, especially with the stock markets tanking and unnattractive interest rates,'' said Madhukar Jha, precious metal and diamond retailer.
"Most buyers fear that prices will go up in the short term and are making small purchases as a hedge at this point. Marriage season will soon be here and the high gold price will not stop purchases,'' said Jha, whose retail outlet has floated a new scheme for equated installments.
It is traditional in India to gift gold jewellery during weddings and other religious occasions.
Several bullion houses across the country have invited customers with a promise of an instalment payment scheme. This has helped people put in small amounts of cash towards precious metal buying, with a promise to pay in 3 or 6 instalments.
Gold retailer Mohan Pimplekar says the instalment scheme is very much in vogue across the country and even with smaller bullion retailers. ``In the coming months, as uncertainties in the global as well as domestic markets remain unsolved, the interest in gold is bound to catch up. Most jewellers have realised this and are putting out new schemes to bring in customers,'' he added.
"Though the monsoons have played truant, demand for bullion in the rural areas is not that sluggish,'' said bullion retailer Vivek Desai, adding that MMTC's venture to popularise gold and silver jewellery and medallions is the new find for rural buyers.
MMTC and Indian Potash forged a ‘flagship venture' last year to popularise MMTC's brands of gold and silver, both jewellery and medallions, across the country's semi-urban and rural markets. This was brought on in the wake of robust consumers' preferences for purity of bullions in rural areas.
India's largest gold importer, MMTC has a vast marketing arm that reaches to the target clientele in rural areas. MMTC had said its retail gold sales crossed $110 million (Rs 6.1 billion) as on March 15, from $88 million (Rs 4.9 billion) during the same time last year.
The state-owned MMTC has reportedly said it is expecting more than 30% growth in gold retail sales during this fiscal and is in the midst of organising jewellery exhibitions in all the major cities across the country.
On Wednesday, gold futures on the Multi Commodity Exchange opened higher against the previous close. The uptrend in gold prices was attributed to rupee depreciation against the dollar.
Prices advanced by Rs 100 to reach above $549.34 (Rs 30,300) per 10 grams in the Mumbai bullion market. Retailers attributed this to festive season buying amid firm global trends. The maximum jump in prices was seen in Chennai, where gold became costlier by Rs 1,095, followed by Delhi with a again of Rs 960.
Bullion retailer Rakesh Anand said gold buying has increased among jewellers and stockists to meet wedding season demand expected later this month. ``Gold prices are likely to remain above Rs 30,000 per 10 gram level in the coming days and even move slightly higher,'' he added.