Calcutta, Aug. 28: The mercurial rise in gold prices has sent two sets of consumers in divergent directions — jewellery buyers are deferring purchases in the hope that prices will eventually dip, while speculative investors are stocking up on the precious metal on expectations of a further surge in rates.
Deep-pocketed investors in gold hope to book a profit when rates rise further, while middle-class jewellery buyers are confused about the volatile price trend and feel buying gold is way beyond their means now. They would rather wait for the price to stabilise before buying.
According to bullion traders and jewellers, 24-carat gold prices in Calcutta today zoomed to Rs 34,850 per 10 gram. The price was Rs 33,700 on Tuesday. Hallmark (22-carat) gold touched Rs 34,200 per 10 gram (unofficial rates as the Calcutta bullion market was closed for Janmashtami).
In New Delhi, gold scaled a new peak of Rs 34,500 per 10 gram as the rupee hit a new intra-day low of 68.85 per dollar amid a firm global trend.
Speculation over rising crude prices and concerns over political unrest in Syria pushed up gold prices in the international market where the metal hit a peak of $1,433.31 an ounce, its highest since May 14.
Back home, major gold outlets in Calcutta’s Bowbazar today saw lower footfalls as retail customers stayed away.
Subir Ghosh, a resident of Salt Lake who was buying a piece of jewellery at the Bowbazar outlet of PC Chandra Jewellers, expressed concern over the rising prices.
“The way prices are moving northwards, only people with deep pockets will be able to afford gold in the coming days. A common man has to delay his purchase and wait for more clarity on prices before the festive season begins,” Ghosh said.
Even sellers share buyers’ concerns over rising prices as their sales suffer but are hopeful that demand will pick up during the festive season starting October.
“The July-August period is usually a slack period for jewellers. But even then, the retail sales are lower as prices are rapidly rising and individuals are deferring purchases,” said Bablu De, proprietor of Guinea Emporium.
“There is a lot of confusion among buyers on when to make the purchase. But, despite the higher prices, gold jewellery is very much an asset and demand is expected to pick up during the festive season,” said C.K. Roychowdhury of MP Jewellers.
Even with jewellery sales losing shine, bullion merchants said there was speculative trading among investors who were looking to book profit from the price fluctuation.
“Those investors who had bought gold when prices were down at Rs 25,000-28,000 are now selling gold and booking profit,” said Harshad Ajmera, founder of city-based bullion merchant JJ Gold House.
Bullion traders said amid apprehensions of the rupee breaching 70 against the dollar, the dollar priced metal could see a further spike in prices with speculative investors parking funds in this safe asset, away from equity.
The benchmark BSE Sensex today plunged more than 500 points in intra-day trade, but recovered marginally by 28 points to close at 17996.15.
“The bullion demand from investors has got a boost as the rupee hit fresh record low and equities tumbled, leaving no place for investors but to park their funds in gold as a safe-haven,” Surender Jain, vice president of All India Sarafa Bazar, told a news agency.
Meanwhile, jewellers are expecting customs authorities to soon release gold held up at warehouses because of confusion over the RBI's recent notifications on the import of the precious metal. With the release of gold from the warehouses, total import in August is likely to go up to 4-5 tonnes.