Thinking of buying gold this Diwali? You may have to drop the idea or end up spending a bomb - maybe as much as Rs 40,000 per 10 gm - seeing how the price of the precious metal is shooting up and showing no signs of slowing.
Experts say that by November – spurred by increased demand for the festive and wedding seasons - gold is expected to breach the Rs 40,000 psychological barrier.
Wholesalers in Delhi agree, but put the price at a slightly lower Rs 37,000- 38,000 range.
With the rupee in freefall and the government cracking down on gold imports to curb foreign exchange outflow, the price of the metal has jumped from Rs 28,270 on August 1 to Rs 33,265 on August 28.
On Friday, it bucked the trend and dipped to Rs 31,700 from Rs 32,325 the day before, but experts say the good news won’t last long.
The import curbs will likely stay in place till February, that is, through the wedding season. And the supply shortage could boost prices further.
Even before the curbs, rising prices had already hit gold imports with volumes dipping from 142 tonnes in April and 162 tonnes in May to just 32 and 47 tonnes in June and July, respectively. After the curbs, the volume tumbled to 5 tonnes in August.
“The price of gold depends on many factors... It is currently up because of the rupee and nobody knows where that will end up,” said Bachhraj Bamalwa, chairman of media and public relations for the All India Gems and Jewellery Trade Federation.
“During the festive and wedding seasons, there will be a supply crunch that could drive prices up more.”
“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 now in case it rises further,” said homemaker Shanta Agarwal, 36.
“For now, we plan to wait. The price is too high. In the worst-case scenario, we will take out our old jewellery and remake it in a new design.”