Gold prices fell below ₹1.2 lakh per 10 gm for the first time in three weeks, with the decline likely to boost volume sales of the precious metal during the November-March wedding season, traders said. Jewellers have started restocking gold to take advantage of falling prices.
On Tuesday, retail gold was trading at ₹1,19,164 per 10 gm, excluding goods and services tax (GST) of 3%. Since Dhanteras on October 18, gold prices have dropped by 9%, slipping from the record of ₹1,30,874 per 10 gm set on that day. Since October 7, when gold was ₹1,19,941 per 10 gm, prices had been rising before peaking on Dhanteras, when Indians purchase gold for luck and prosperity.
“Since prices have corrected by 9%, volume sales are likely to pick up,” said Suvankar Sen, managing director of listed jewellery firm Senco Gold. “Value wise we have witnessed 20-25% growth this festive season but volume wise it is 10% down. Affordability will increase with the price fall. For instance, if someone was buying 30 gm gold, he had to bring it down to 25 gm because of high prices. Now he may think about increasing the volume to 28 gm.”
Gold prices have fallen below $4,000 per ounce as bullion’s appeal as a safe haven diminished with indications of US-China trade tensions easing. The market is now awaiting this week’s Federal Reserve interest rate decision. Talks between Donald Trump and Xi Jinping will be closely monitored.
Along with gold, silver prices have also fallen to their month-ago level. The retail price of silver on Tuesday was 1,43,400 per kg. Prices have dropped by ₹34,700 per kg since October 14, when it hit a record ₹1,78,100 per kg.
“If Trump and Xi have a fruitful trade summit this week, gold may find itself somewhat in the dark,” said Renisha Chainani, research head of Mumbai-based Augmont Gold. “If the Fed adopts a dovish stance with this week’s anticipated rate decrease, however, this might be countered. Investors are watching for any forward-looking remarks from Fed chair Jerome Powell, as it is generally anticipated that the Fed will lower interest rates at the conclusion of its policy meeting on Wednesday”
While a fall in gold prices had been expected, the drop since Dhanteras has been sharper than anticipated, said Avinash Gupta, vice chairman of the All India Gem & Jewellery Domestic Council. “Jewellers across the country have started restocking gold in anticipation of better wedding sales,” he said. “People will now have more money to buy jewellery. Prices have corrected now, and from here it can again go up further. Those who have weddings in the family have started booking gold at this rate so that they do not feel pressure on the pocket in the upcoming wedding season.”
