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Gold decouples from wedding season

Also, equity markets across the globe are doing well, dulling gold’s relative appeal as a safehaven investment.

, ET Bureau|
Nov 19, 2019, 08.01 AM IST
0Comments
Reuters
Gold-1---Reuters
Saurabh Gadgil, managing director of the Pune-based PNG Jewellers, said that even though footfalls have increased, volumes have not.

Commodity Summary
MCX

GOLD
Kolkata: Wedding season demand for gold has dropped this winter. Although the price of gold, of which India is among the two biggest consumers in the world, has moderated by about 5 per cent from record highs over the past six weeks, off-take has trailed expectations of most jewellers.

Assessments of demand declines differ, however. The All India Gem & Jewellery Domestic Council says that demand has shrunk 40 per cent, while the India Bullion & Jewellers Association (IBJA) pegs the drop at 15 per cent compared with last year’s wedding season. However, members of both associations believe that the worst may be over, and that the statistics may head north from the beginning of next year.

“High prices of gold and an economic slowdown have affected the wedding season demand. It had picked up to some extent during Diwali,” said Anantha Padmanabhan, chairman, All India Gem & Jewellery Domestic Council. “The wedding season begins just after Diwali. But unfortunately, we have not witnessed an uptick in demand after Diwali.” But Surendra Mehta, national secretary, IBJA, said that demand is improving, although sales are lower than in the 2018 wedding season.

“It is true that demand is lower than last year by 15 per cent, but there is activity in the market. Consumers now understand that the price of gold is not likely to fall below Rs 38,000 per 10 gm in the immediate term,” Mehta said. “There is a possibility that prices may go up further. So they are buying at this level.”

Although there is optimism locally that the price of gold will go up further and that this is the right time to buy, global indicators show that gold prices may fall on a US-China trade deal. Also, equity markets across the globe are doing well, dulling gold’s relative appeal as a safehaven investment.

Saurabh Gadgil, managing director of the Pune-based PNG Jewellers, said that even though footfalls have increased, volumes have not.


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