The price of gold went up marginally on Friday but that did not deter eager shoppers in the city.
While some residents squeezed out money from the monthly household budget to cash in on the dip in gold prices, a few others like P. Suganthi took loans.
“The thrift society at my workplace provides loans at low interest. I borrowed Rs. 2 lakh to invest in gold. This could be just a temporary trend and prices may go up again,” she said.
Jewellery stores in the city were buzzing with crowds right from the morning. One gram of 22-carat gold was priced at Rs. 2,449 on Friday morning, Rs. 10 more than the previous day’s rate. By evening, it escalated to Rs. 2,466 per gram.
Most jewellers in the city recorded robust sales. “People are buying gold anticipating a further increase and correction to last month’s prices. About 60 per cent of shoppers are buying for weddings. There are also some customers who exchanged old gold to buy new jewellery,” said Babu Immanuel, former president of Madras Jewellers and Diamond Merchants Association.
Some like Revathy bought ornaments on Friday even though the price was slightly high. “It is still less by Rs. 2,300 per sovereign sold 10 days ago. This type of substantial fall in cost is rare and I wanted to invest some money,” she said.
Bullion investors like P. Nirmal Jain are waiting for a further slump to buy 24-carat gold bars. “It is easy to liquify 24-carat gold as it is purer and the returns are greater when compared with resale of ornaments,” he said.
However, the downside of the price slump is that banks and pawn brokers have cut down on loan value against gold. Banks, including State Bank of India, have reduced the rate of loan available to Rs. 1,600-Rs. 1,800 per gram from the earlier rate of Rs. 2,000-Rs. 2,300 per gram.
Officials of public sector banks said a few customers pledged old jewellery to buy new ornaments.
Even though they may have to pay an interest for the jewel loans, customers still stand to gain as the cost of the yellow metal will go up in the coming months, said sources in Tamil Nadu State Apex Co-operative Bank and Syndicate Bank. Some bank customers also foreclosed recurring deposits, which are bound to mature in a few days, in order to invest in gold.
However, pawn brokers like Amrit Lal of Mogappair expect a loss in margin and said at least 30 per cent of customers who pledged jewellery were not likely to redeem it as the prices had dropped.
“They would rather buy new gold than repay the loan amount with interest,” he said. Banks said they were not worried of such a possibility as loans were provided for just a partial value of the gold pledged.
Jayanthilal Chalani, president of Madras Jewellers and Diamond Merchants Association, said the increased domestic demand had pushed up the price and the trend was volatile.
