High costs keep gold sales low during Dhanteras

Brisk buying of gold coins and jewellery by consumers on the auspicious day of Dhanteras pushed up prices of the yellow metal in Delhi. While the price of gold went up by Rs 100 to Rs 27,130 per 10 grams, silver gained Rs 300 to touch the Rs 53,500 per kg on the day when purchases of jewellery are seen to be auspicious precursors of more wealth flowing into family coffers.

The auspicious occasion began on Thursday last during Pushpa Nakshatram and will continue till Deepavali on Wednesday. Consumers flocked to jewellery stores, such as Tanishq where long queues could be seen during the day as sales proceeded at a brisk pace.

"I had to wait for over 90 minutes to get my turn at the Tanishq jewellery counter,'' Anjali Verma, a 35-year-old working woman told MAIL TODAY. Banks also logged higher sales of gold coins on the auspicious day. Punjab National Bank (PNB) deputy general manager S.A.R. Zaidi said, "Sales this year are way above what we had clocked last year at this time."

"With stock markets going into a tizzy it appears investors are making higher safehaven investments in gold despite rising prices of the precious metal," he observed. Most jewellers said sales were up by around 25 per cent on Monday compared to normal working days. Other jewellers in the National Capital Region's (NCR) famous Dariba Kalan area near Chandni Chowk said sales were picking up on Dhanteras, although the quantity of purchases have been low compared with last year due to higher prices.

"People have bought two grams on an average compared to 10 grams last year," said Prithviraj Kothari, director of Mumbai-based Riddhi Siddhi Bullions. "People are buying even when prices are high. The reason is that they do not see gold prices correcting further. However, this time they have cut volumes," a sales person from PC Jewellers in Karol Bagh said.

"This year there is a sudden surge in the demand for gold coins and gold bars. People want to invest in gold bars and gold coins rather than in jewellery," a senior official from MMTC told Mail Today. Ketan Shroff, director of Mumbaibased Pushpak Bullions concurred, when he said, "The high demand was mostly confined to small coins and bars this time and not jewellery."

Reena Walia, analyst at Angel Broking said, "Investors are cautious and are buying in a limited manner due to the high prices as well as economic uncertainty in the global markets."

"Volumes were down 20-30 per cent, but value of business grew 20-25 per cent during the season, so far, as the price of gold saw 40 per cent spiral over the last 12 months," Kothari added.

Gold prices in global markets, which have a crucial bearing on Indian prices, also gained 0.9 per cent to $1,657.30 an ounce and silver by 1.1 per cent to $31.73 in the wake of the uncertainty over the Euro debt crisis.

Walia added that though gold sales will pick up in the festive week, the overall sentiment in the market remains low. "It is mostly festive demand and is unlikely to last much longer. It may be there for a week or 10 days from now," Shorff added.