Despite discounts gold fails to attract buyer..Why?
With the offtake of gold and jewellery grinding to a halt, dealers are
nearly doubling their discounts over the import parity price to offset the pain
caused to consumers by high prices and a sliding rupee.
This was evident from the surge in gold holding with the world’s largest gold exchange traded fund, SPDR, by 250 tn since January 1 to a record 1,029.29 tn on February 26.The discount offered by dealers on gold was Rs 200-250 at the level of Rs 14,000 per 10 gm, but it has now doubled after prices topped Rs 15,000, Jain said.
“Medium-sized jewellery shops are offering discounts to keep the business running as they have large fixed operational costs like salaries and maintenance,” said Darshan Zaveri, an Ahmedabad-based premium jewellery maker.
Ever since prices crossed 14,000 rupees per 10 gm, retail demand has been falling and above 14,500 rupees, consumers are only selling their scrap gold, Jain said.“We have witnessed at least 25-30% rise in gold scrap supply for refining,” said Anil Arora, partner, National India Bullion Refinery.
However, due to change in consumers’ price perception that gold could scale 17,000 rupees per 10 gm from 15,000 rupees a few weeks ago, the flow of scrap gold has slowed down in the last couple of weeks, Arora said.
People looking to sell scrap gold are expecting global prices to touch a new high of around $1,040 an ounce, which can take domestic prices above 17,000 rupees per 10 gm as the outlook on the rupee continues to be grim, Arora said. Jain said scrap gold sales by consumers have halved from the level witnessed in early February.
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