A shining new necklace for the wife, your daughter’s wedding gift or a coin for investment’s sake – if gold is on your mind this Diwali and wedding season, get ready to spend as much as Rs. 40,000 per 10 gm.
If you were taking heart in the minor fall in the price of the yellow metal on Saturday – Rs. 31,700 from Friday’s Rs. 32,325 – experts say this slide is unlikely to last.
The fall of the rupee against the dollar has already driven the price of the precious metal up from Rs. 28,270 on August 1 to Rs. 33,265 on August 28, amid a crackdown on imports by the Central government which is desperate to curb the outflow of foreign exchange.
In November, as demand soars further during Diwali – especially on Dhanteras which is considered the most auspicious day for buying gold — and ahead of the wedding season, experts say the price is expected to breach the psychological barrier of R40,000 per 10 gm.
Since the curb on imports will most likely stay in place until February — in other words, all through the wedding season — the short supply could boost prices further.
“During the festive and wedding season, there will be a supply crunch and that could further increase the prices,” said Bachhraj Bamalwa, chairman of media and public relations for the All India Gems and Jewellery Trade Federation.
With imports curbed, he said one key source of gold is sale by customers and investors.
Rising prices have already hit import volumes, with the amount of gold brought into the country dipping from 162 tonnes in May to just 47 tonnes in July. After the curbs, imports dropped to about 5 tonnes in August.
Customers, meanwhile, are recycling old jewellery rather than buying fresh gold. “There is currently zero demand for fresh gold,” said Kumar Jain, spokesperson for the Bombay Bullion Association and owner of a Mumbai-based jewellery store.
Shanta Agarwal, a 36-year-old Mumbai homemaker, said, “We have a wedding in the family in November and we don’t know whether to wait in the hope that the price will come down or buy the jewellery now in case prices rise further.” Her family has decided to wait it out and recycle old jewellery in the worst case scenario.