Soaring gold prices led Indian buyers to choose coins and bars over jewelry during the Dhanteras festival on Saturday, fueled by hopes that the precious metal’s glittering rally would continue, industry officials said.
Dhanteras, which marks the start of the five-day Diwali festival of lights, is considered auspicious for buying gold and is one of the busiest gold-buying days in the world’s second-biggest consumer of the metal.
Gold sales during Dhanteras were 10 to 15 percent lower in volume terms compared with last year, but total value rose sharply due to higher prices, All India Gem and Jewellery Domestic Council chairman Rajesh Rokde said.
Photo: AP
“Gold jewellery demand took a hit with record-high prices, dropping nearly 30 percent from last year, but coins and bars were flying off the shelves,” India Bullion and Jewellers Association secretary Surendra Mehta said.
In India, buyers typically pay 10 to 20 percent of the gold price as manufacturing charges for jewelry, making it even more expensive than buying gold coins.
Local gold prices closed at 127,008 rupees (US$1,444) per 10 grams on Friday after hitting a record high of 132,294 rupees, marking an increase of more than 60 percent since last year’s Dhanteras. India’s NSE Nifty 50 share index has risen about 5 percent during the period.
Facing record price surges, the industry is offering healthy discounts on jewelry making to maintain strong gold-buying interest throughout the festive and upcoming wedding seasons, World Gold Council head for Indian operations Sachin Jain said.
Indian dealers were this week quoting a premium of up to US$25 per ounce over official domestic prices, inclusive of 6 percent import and 3 percent sales levies, the highest in more than a decade.
Meanwhile, demand for silver coins, bars and jewelry is strong this year, driven by the metal’s stellar price rally, PNG Jewellers Pvt Ltd chairman Saurabh Gadgil said. Investors believe silver could outperform gold, dealers said.
Higher returns from precious metals have been attracting strong inflows into physically backed gold and silver exchange-traded funds in recent months.
“With jewelry stores open till midnight and Dhanteras continuing into tomorrow afternoon, we expect buying momentum to carry forward,” Rokde said.
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