A sign of relief for Indian Jewellery enthusiasts, gold is still glittering. First the Spanish effect on Global Gold and then the NRI ray of hope. Gold steadied on Monday as investors still wary after last week’s price drop sold the metal above $1,600 an ounce, erasing gains it made on the back of a surge in the euro after European ministers agreed a $125 billion deal to aid Spanish banks. The Euro-US Dollar- Gold link might be unstable at this moment, but it shows likelihood of stable gold in future.
However, Indian jewellery industry might experience an increase in gold purchase. The current expectation is of 30-40 % increase in sales in these couple of months, June-July. In this period, the NRIs take a trip back home from west Asia to get together with family and attend various family functions such as weddings. With this inflow of NRIs, there is an expectation of increase in jewellery purchase.
There was a good volume of scrap gold last week, when gold touched Rs 30,000 for 10 grams. In Kerala, with a heavy gold taste, there has been an increase of 15-20% in scrap sales. Famed Zaveri Bazaar in Mumbai notes nearly 70-100 kg of scrap gold daily across India last week.
The experts in the jewellery industry share the opinion as well. Amjad Hussain, marketing director of Kerala-based Malabar Gold, said: “A lot of NRIs visit Kerala during this time and weddings take place according to their arrival schedule. We are expecting a 30-40% increase in sales due to NRI buying and marriages that will be held during this period.”
“There will definitely be an increase in gold sales in the next one month. Jewellers are extremely positive on NRI buying”, added James Jose, secretary, Association of Gold Refineries and Mints, and managing director of Chemmanur Gold Refinery.
Jose further added, “There has been an increase of 15-20% increase in scrap sales last week.” According to the experts, there has been an increase in scrap sales of gold at retail level, including online jewellery shopping as people who need money are liquidating gold.
Prithviraj Kothari, president of the Bombay Bullion Association said, “Gloomy equity markets and high interest rates have forced investors in India to cash out of gold.” “There is no money available and people are selling their old gold,” Kothari added. He also added that India could see scrap sales increase to 400 tonne this year, more than last year’s 130 tonne.
“Gold imports are down by 50% and people have sold scrap gold and booked profit at the rate of 18-24% per annum. Even today, also we are seeing people selling scrap gold. There is selling pressure in the market and sellers are quite active,” said Mukesh Kothari, Director of RiddiSiddhi Bullion. Nitin Nachnani, an analyst with Geojit Comtrade concluded, “Prices may come down to Rs 29,000 per 10 gm within a week or 10 days.”