Fall in gold prices make jewellers happy as shops open after lockdown

Gold (Image: Pixabay)

The decline in international gold rates may spell good tidings for jewellers in India as it is happening at a time when the lockdowns imposed in various states due to the second wave of Covid-19 are being gradually lifted.

Cheaper jewellery may spur increased demand as shops open after a gap of 1-2 months in many states

The international gold prices fell on the reports of the US Federal Reserve giving an indication to raise the interest rates twice in 2023. Earlier, it had indicated against a rate hike before 2024.

The international spot gold rates fell by about 2% since the announcement on Wednesday. It is hovering under $1810 per ounce. On June 1, it had touched $1907 per ounce on a weak dollar. But the greenback has become stronger with the dollar index going above reaching 91.5 mark.

The lockdown has been partially lifted in Kerala while it is slated to be lifted in Tamil Nadu by June 21. Both these states together account for a large share of gold consumption in India.

In Kerala the per gram rate of 22 carat gold used in jewellery dropped by Rs 50 in a single day to Rs 4485 on Thursday. `` We are expecting increased rush when the shops open on Friday. Apart from the purchases postponed due to lockdown, the price drop could raise the demand further,’’ said B Govindan, chairman of Bhima Jewellers.

The customers may buy for the wedding season coming in August. `` These days people buy when the opportunity arises and a don’t plan purchases,’’ Govindan who is also the southern zone chairman of All India Gem &Jewellery Domestic Council (GJC), said.

He expects a surge in demand when the lockdown is likely to be lifted in other southern states though he is not sure whether the current slide in prices will be sustained.

The gold loan NBFCs are also anticipating a rise in demand after the lifting of the lockdown. ``Many are feeling the pinch and gold loans are easier and convenient option for them. We expect an increase in new customers once the lockdown is lifted as only re-pledging is possible through online,’’ said Kiran James, marketing head of Muthoot Mini Financiers

The 22-carat gold price in India after touching a high of Rs 50,350 per 10 gm in January plunged to Rs 42 980 by the end of March before rising again. After reaching a high of Rs 47880 on June 10, it slid by Rs 530 on Thursday.

Analysts reckon the current trend may continue for the short term. `` The gold prices may move sideways. Right now, the dollar is strong and there is no trigger for an increase. We have to wait for the release of employment data in the US next month,’’ said Hareesh V, Research Head, Commodities, Geojit Financial Services.

Indian Bullion and Jewellers Association national secretary Surendra Mehta said the decline will augur well for the industry but as the situation is uncertain, it would be better to wait before taking a position. `` If the global rate touches $1798 per ounce, then it could go down all the way to $1700,’’ he said.