Gold prices edged slightly higher during the week amid a shadow cast by the Covid pandemic on Akshaya Tritiya jewellery sales on Friday in the country.
After breaching the $1800 per ounce last week, bullion prices were marginally up during the week. The prices were around $1835 per ounce on Friday, about 0.8% up from a week ago. `` Weak dollar has been supporting gold prices in the last two weeks. The US job data report released last week did not have much impact on the gold prices,’’ said Hareesh V, head, research, commodities, Geojit Financial Services.
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Gold June contract prices at MCX were around Rs 47,604 per 10 grams, an increase of 0.35 percent during the day. Fear of interest rate hike following the data showing a rise in inflation in the US capped the gains. The prices are marginally lower from a week ago.
With the shops remaining closed in most parts of the country, the jewellers have resorted to online sales. Ramesh Kayanaraman, ED, Kalyan Jewellers, said its scheme of gold ownership certificate launched during last year’s lockdown will continue to see traction since the overall sentiment in India is not favourable with customers hesitating to step out of their homes.
"In India, 20 percent of our showrooms are functioning but with regionalised timing restrictions. Considering the very low base of 2020, this year's Akshaya Tritiya will naturally be better, but the numbers will not be comparable to the pre-covid situation of 2019 or earlier," he said.
Since there is no global shutdown, he pointed out that all West Asian showrooms are operational but the business has not reached the pre-COVID level as the newly imposed flight and travel restrictions from south Asia have impacted the jewellery sector.
The pandemic has now adversely affected the gold jewellery sales during Akshaya Tritiya for two consecutive years. "The online sales are only 10 to 15 percent of the normal sales and the second wave seems to be worst than the first one. However, the gold prices may continue to rise because of other external factors and may touch $50,000 per ounce by the end of the year," said Ashish Pethe, chairman of All India Gem & Jewellery Domestic Council.
Online sales are resorted to by the big jewellers while the smaller ones who constitute the majority of the gold jewellery industry have been hard hit by the pandemic. "Even we are operating on lesser margin as we take advance booking on online gold jewellery sales. If the price goes down from the date of booking, we make the necessary changes but if it goes up, we still deliver at the price on the booking date," said B Girirajan, chairman, Bhima Jewellers.
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Analysts believe the lower interest rates and the liquidity push by the central banks and the vaccination drive will keep gold prices high, in the coming weeks. Further fall in dollar rates may also push up yellow metal prices.