Cost cut adds no shine to gold

“The wedding season is just over and the festival season begins only in August/September,” says Pradeep Bhosale, shop manager, Popley and Sons Ltd. According to him this month is traditionally a slack season and the fall in prices from Rs 4,700 to Rs 4,200 has not helped in fuelling the enthusiasm of buyers. Nanjibhai Mehta, owner of a jewellery store at Ghatkopar, echoes the feeling of his colleagues in South Mumbai. “When I first heard of the fall in prices, I thought we’d have a mini Diwali. But this has not happened so far,” he noted.

Industry observers point out that potential buyers are also playing in the booming stock market, while the black money in the market is being hoarded for laundering under the central government’s Voluntary Disclosure of Income Scheme.

According to M G Damani, president, Bullion Association, gold buyers are waiting for a further fall in prices before venturing out to buy.

“People will start buying gold when they feel that prices are rising, so a slight rise in price will see more gold being sold,” he felt.Though gold prices began firming up today, Damani felt that they are likely to fall.

“The market has to absorb all the 167 tonnes of gold offloaded by the Australian Central Bank, only then can the prices increase,” he said.

Incidentally, Indian gold importers have increased their offtake from the international market. Daily imports have risen by 10 per cent over the past week, say sources.

However, the World Gold Council executives in the city are optimistic about Mumbaikars picking up more gold. “The drop in gold prices has resulted in a buying frenzy in Calcutta, Delhi and Madras.

"The market has reported physical shortage of stocks and the gold biscuit even commands a two per cent premium in Calcutta,” the WGC said in response to a questionnaire from Express Newsline. WGC expects Indian housewives, who normally squirrel away small amounts of money for buying gold in one and two tolas, to come out and buy.

Incidentally, the WGC feels that the cash crunch in the market has not affected gold prices.

“The gold demand figures indicate that there is no shortage when it comes to the purchase and acquisition of gold,” it added.