Stronger global equity market brings down gold rates; jewellery stores in city see huge rush
For the first time in recent years, the price of gold slumped by Rs. 123 per gram on Monday.
It boosted sales of the yellow metal in the city by a minimum of 30 per cent.
On Monday morning, the price of a gram of gold stood at Rs. 2,571. It dropped to Rs. 2,509 per gram by evening. One sovereign of gold sold at Rs. 20,072 — Rs. 982 less than Saturday’s price when the bullion market closed at Rs. 21,056.
Kavitha Kesavan of Mahalingapuram was one among the many city residents who flocked to jewellery showrooms to cash in on the slump.
“I bought five sovereigns of gold jewellery for my daughter on Sunday. I was able to save at least Rs. 300 per gram, despite the making charges and wastage, thanks to the dip in gold prices over the past month,” she said.
Last week, the cost of a gram of gold came down by about Rs. 250 when compared to the price that prevailed on April 8. It was the perfect time for wedding jewellery shopping, said Anuradha Vasudevan of Chromepet.
“We bought some jewellery for our daughter’s wedding a few days ago. We now plan to purchase more, this time for the bridegroom. The savings may be minimal, but it is still valuable,” she said.
The sudden dip in gold prices was triggered by a decline in international prices and a stronger global equity market, said jeweller Pravin M. Mehta. He said the price of a gram of gold was Rs. 800, some four years ago. The slump in prices had panicked many investors but there was nothing to worry about as it was a temporary trend.
Tamil Nadu Jewellers Federation chief advisor L.K.S. Syed Ahamed said several big investors were selling their stocks and there was a surplus in the global market. Business had doubled over the weekend due to increased buying, courtesy the wedding season.
According to the All India Gems and Jewellery Trade Federation, one sovereign of gold was priced at Rs. 5,600 in 2005. The volatile trend of pricing began in 2009 when a sovereign sold at Rs. 12,140. Gold prices hit the roof on November 26, last year, when a sovereign cost Rs. 24,544.
The Federation’s regional chairman N. Ananthapadmanbhan said a number of factors, including a weak U.S. economy had sent the prices skyrocketing then.
“The strengthening of the global economy is now bringing down the cost of the precious metal. We can anticipate a further dip of about Rs. 50 per gram over the next few days. If the rupee value appreciated better and the import duty was less, one gram would sell for as little as Rs. 2,200,” he said.
Jayantilal Chalani, president of Madras Jewellers and Diamond Merchants Association, said the trend would continue for a month. Exchange of old gold jewellery had taken a hit due to the reduced prices, he said.
Silver was sold at Rs. 48.60 per gram on Monday. Jewellers expect the robust sales to continue and look forward to Akshaya Tritiya in May, considered an auspicious time for buying jewellery.