Bullion dealers and jewellers in the country are reporting that sales have dropped to more than 50 per cent below normal in the past 10 days due to record jump in gold prices, according to a report by news agency Reuters.
Local gold prices hit a record Rs 35,960 per 10 grams on Tuesday, having jumped more than 10 per cent over the past month.
“Of late, customers are not used to such a jump in prices. They will not raise allocations to buy gold just because prices have risen. Volume-wise demand will drop 10% from last year,” Anantha Padmanabhan, chairman of the All India Gem and Jewellery Domestic Council (GJC), told Reuters.
Industry insiders revealed that the weak demand was forcing jewellers to offer huge discounts to lure customers back to the shops.
This has also cast a shadow on prospective sales during the festival season. Demand usually picks up in the second half of the year due to the wedding season and celebration of festivals such as Dussehra and Diwali, when buying gold is considered auspicious.
“Demand will fall during festivals if prices remain at the current level,” the report quoted Mukesh Kothari, director at dealer RiddiSiddhi Bullions in Mumbai, as saying.
On the other hand, the price rise has also prompted some consumers to sell their old jewellery, said B Govindan, president of All Kerala Gold and Silver Merchants Association. “Some people think this is best time to sell their ornaments,” he added.
