Yellow metal volatility hits traders, customers
After escalation in the Israel-Iran aerial conflict, besides the ongoing Russia-Ukraine war driving up the gold price above Rs 1 lakh per 10 gm, there has been a sharp decline in the sale of gold jewellery in the domestic market.
Jeweller Vijay Mehta said gold prices soared as investors flocked to safe-haven assets due to geopolitical shocks. Consequently, the sale of gold ornaments came down to half as small and medium buyers vanished from the market. He warned that a prolonged and intensified conflict in the West Asia would have ramifications not only for gold, but also on fossil fuels, natural gas and other products.
Volatility in the international market will trigger significant inflationary trends in other sectors as well.
Anand Sikri, president, Ludhiana Jewellers Association, said: “Worldwide, geopolitical instability always turns affluent and big institutions like governments towards gold. Countries are buying gold because they do not want to solely depend on the dollar.
The price of gold in the international market was around $3,432 per ounce today, while it was $3,224 per ounce on April 15. International agencies have already predicted the gold price to reach $4,500 per pounce in the next three years, but conflicts accelerated its price escalatory trend.
In the domestic market, he said, bullion traders, who invest in pure gold, have also withdrawn from the market. There used to be a difference of Rs 2,000 between the prices of the MCX and local market, Now this difference has also vanished.
Eighth-generation gold ornament jeweller Mudit Jain, whose family had migrated from Pakistan’s Sialkot to Jalandhar during the Partition, said volatility in the yellow metal would hit customers and traders across the board. Customers below Rs 50,000 would vanish, while middle-income group families would go for buying 18-carat jewellery. He added that middle-income group families were already searching for alternatives to gold due to the high price.
Simranjit Singh, a buyer, said volatility and high prices were keeping them on tenterhooks when to buy gold ornaments. Earlier, India-Pakistan four-day hostility forced them to postpone their plan to buy gold for the marriage of their daughter. Now, the spread of hostilities in the West Asia after Russia and Ukraine created negative sentiments for them, as future looks uncertain.
Meanwhile, jewellers in Punjab are approaching ornament-makers in Mumbai and Coimbatore where professionals are rolling out light-weight jewellery on imported machineries. These machines are being imported from Turkey, Singapore and Italy. However, Italian machines stood out for their capability in rolling out fine light jewellery. Earlier, a light- weight set weighed 20 gm. Now, the same design is available in 10 gm. A gold chain previously available at 10 gm can now be procured at 3 gm.
Punjab