Gold surged to 2-year high of Rs 31,000 per 10 grams in Delhi on Friday, fuelled by supply restrictions.
Skyrocketing gold prices are expected to result in 25-30 per cent decline in jewellery business during this festive and marriage season, say industry players.
Gold surged to 2-year high of Rs 31,000 per 10 grams in Delhi on Friday, fuelled by supply restrictions after the government increased import duty to 10 per cent.
“Had the prices been below the level of sub Rs 30,000, it would have resulted in a very good business...this can bring down the business to an extent of about 25 to 30 per cent,” Apranje Jewellers Director Priyesh Savani told PTI on the sidelines of ‘Asia Jewels Fair Expo 2013’ organised here.
Stating that the macro economic situation and decisions on gold imports have hit the jewellery industry very badly, he said, “availability of gold is an issue, pricing of gold is even bigger issue, and the way gold price is rising— it is all artificial pricing;...duty and premium is hitting the market.”
“You can’t compete now as smuggling (will) go up, it has already started and will go up; the way government is treating this industry is really bad, it’s killing the domestic market,” he opined.
Commenting on gold as an investment option, he said “for unaccounted money it is still the best and will always be the best option; investment perspective to the gold is killing the industry.”
Vicky Badera of Panchkesari Badera jewellers said, “Marriage or occasion buying will take place but casual buying will be affected; so there will be effect on the business for sure, as raw material availability will also factor in.”
On government’s decision to restrict gold imports Mr. Badera said, “To some extent the measures taken by (Finance Minister) P Chidambaram to control Current Account Deficit by restricting import of gold is understandable as it is affecting our economy; we too at jewellers association and gold council have decided not to sell gold bars and coins but indulge only in pure jewellery business.”
He added that government should also look at other means to sort out the issue of gold imports by talking to jewellers association rather than putting in strong measures that will harm the industry.
However, Shameer Shareef, Associate Director of Malabar Gold & Diamonds said there won’t be much impact on jewellery business during the season due to spurt in prices.
“People who have to buy will definitely buy — especially for occasions; people buying for investment purpose also will buy because prices are going high and they fear that it might cross over Rs 4,000 per gram.”
Stating that macro economic situation and restrictions on imports of gold have influenced the market by increasing gold prices, he said “it will pave the way for grey market to open up for people who will look for options.”
Customers say they are opting to buy gold jewellery only on occasions and are going for fixed budget spending.
Dilip Khariwal a city-based business man, said “I’m here to buy gold for my daughter’s marriage, prices are too high, but I will have to buy as it is an occasion. I’m looking to purchase now in the budget range I have fixed.”
Another customer, a city based professional Yamini said “I have decided not to buy gold for now looking at the prices; it is above the level I had budgeted it to be.”