Depreciating rupee value and increase in import duty cited as reasons for sharp hike
The price of 22-carat gold hit a seven-month high at Rs. 23,576 per eight grams on Monday.
However, it did not seem to deter buyers, who flocked to the showrooms to exchange old ornaments and purchase new ones.
In the past one week, the price of one sovereign (eight grams) escalated by nearly Rs. 2,000. On Monday, one gram of 22-carat gold was sold at Rs. 2, 947 and later, by the evening, at Rs. 2,938.
Various reasons, including the depreciating value of the rupee and an increase in import duty to 10 per cent aimed at improving current account deficit, are cited for the sharp hike in the cost of the yellow metal. Jewellers said the fluctuation in price on Monday evening was influenced by the international stock market.
An increasing number of residents are now exchanging their old ornaments for new. The exchange of old jewellery, which contributed to only 30 per cent of total sales, has now increased to 50 per cent, say jewellers.
The beginning of the wedding season also brought more buyers to the showrooms. G. Chellammal, a resident of St. Thomas Mount, who was buying jewellery for her daughter’s wedding, said, “This purchase was unavoidable. I could not wait longer as the price may go up.”
Some customers exchanged their old ornaments, seeking a better price. They chose schemes that either offered less wastage charges or more money for each gram of old jewellery, resulting in a lesser price for the new jewellery.
Many of them like R. Seetha, a resident of Adyar, chose ornaments to fit into their budget and took home a few grams lesser than planned.
Jewellers in the city expect the cost of one gram of gold to hit Rs. 3,100 in a few days. L.K. Syed Ahmed, chief advisor of Tamil Nadu Jewellers Federation, said sales had slightly dipped after the gold cost shot up last week. But, they were on the rise again due to purchases made for weddings, he added.
Nearly 360 tonnes of gold were imported in the last four months. Following the central government’s restrictions, imports are dipping and jewellers are managing with available stock and recycled gold. When the gap between demand and supply widens, the price is bound to skyrocket, Mr. Ahmed said.
N. Ananthapadmanabhan, regional chairman of All-India Gems and Jewellery Trade Federation, said jewellers had to buy gold at a higher premium from banks and bullion dealers due to the decreased supply.
Most jewellers and banks have also stopped gold coins sales to discourage investment. “Some banks still have some gold that could be offered to jewellers. This would further bring down imports,” he said.
The cost of silver too escalated to Rs. 56.30 per gram on Monday from Rs. 55.20 on Saturday.