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El Dorado: Gold in triple play high

business Updated: Oct 22, 2011 04:01 IST
Himani Chandna Gurtoo

Sumukhi Seth, a 20-year-old college student in Delhi, is buying herself a ring this Diwali, rather than pick up a trendy mobile handset.

"I would prefer to invest and flaunt," she says crisply.

Youngsters like her are suddenly part of a new gold culture sweeping the country as the time-tested investment vehicle meets the ancient lure of jewellery in the backdrop of a global rally in the yellow metal.

State-owned MMTC Ltd, at its annual gold festival, has introduced a separate line of jewellery for twenty-somethings.

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"The habit of purchasing metals should be encouraged considering the future investment habits," said Preeti Kaur, chief general manager, MMTC, aiming to mix sales with sage advice for youngsters.

Dhanteras, the auspicious day for purchase of gold ahead of Diwali, makes more sense for a lot of buyers these days. The romance with the metal now has many forms: gold bars, silver coins, jewellery and exchange-traded funds (ETFs). Speculators also deal in gold futures on metal exchanges, while you can also buy e-gold, taking virtual delivery on the National Spot Exchange without worrying about where to store your metal.

"Demand for gold jewellery, especially for gold coins and bars have picked up. We are estimating sales to go up by over 55-60% against the last season," said Sanjeev Agarwal, chief executive officer, Gitanjali Export Corporation.

The price of gold has gained 400% in the last decade and between 2005 and 2010, they gained 180%.

"Notwithstanding the recent drop when gold suddenly plunged from a high of $1,923.7 an ounce to a brief low of $1,535, the metal remains one of the safest asset classes investors can hold," said Gagan Randev, CEO, Religare Securities.

Since last Diwali, gold prices have rallied from about Rs 20,000 per 10 grams to a high of Rs 29,000 in mid-September, a rise of 45%. This Diwali, the metal is expected to trade in the Rs 26,000-29,000 range, tracking volatility in international markets and a fluctuation in the value of rupee.

"Footfalls to our retail stores have gone up by at least 30% since the beginning of Navaratras (Dusshera festival week)," said Bhuvan Gaurav, marketing head, Tanishq. He said he expected double-digit growth as it links family sentiments and done well in periods where inflation exceeds interest rates.

"This Dhanteras, we are aiming to sell jewellery for over R10 crore against the sales of R5 crore, last festival. Otherwise sales are up by at least 20% this season," said Ravi Kishore, general manager (retail), MMTC.

Jewellers are laying it thick by adding convenient financing options. Tanishq offers to pick up one installment for the customer or links an attractive purchase bonus to a deposit scheme it has.

Gitanjali Exports is offering a flat 20% discount on jewelllery items, besides gifts across all its brands.

According to the World Gold Council, demand for gold ETFs is likely to explode as investors get accustomed to "click-and-park" mode of investment, shying away from sagging stock markets and bank savings rates that lag inflation.