Spurt in gold demand on Dhanteras due to lower prices
The demand for gold zoomed on Dhanteras across India Tuesday as people flocked to buy the yellow metal given low prices and a pickup in economic activity.
“The demand for gold is 15-20 per cent more than last year,” All India Gems and Jewellery Trade Federation chairman Haresh Soni told this newspaper. He said the demand for jewellery was more than for coins and bullion, which indicated demand for gold as investment was low. More lower and middle class people were buying gold on Dhanteras than high net-worth individuals. “They usually buy gold in the wedding season. It is mostly middle class people who are buying,” he said.
Dhanteras, that falls two days before Diwali, is regarded as an auspicious day to buy gold, silver and valuables, and also utensils. Gold prices are around Rs 27,925 per 10 grams in Delhi, about 11 per cent lower than Rs 31,300 in 2013. Silver was at Rs 39,000 per kg, compared to Rs 49,100 per kg in 2013, a drop of 20.6 per cent.
“This time the demand for gold is good, around 25 per cent more, because of low prices. Gold sales were low for the last 2-3 months, so there was also a pent-up demand,” said Ashok Minawala, owner of Mumbai’s Danabhai Jewellers and Sons.
“The gold demand this Diwali mirrors the general optimism that has set in the economy, reinforcing the traditional faith in gold for the average household saver and the increased economic relevance of this asset class due to various uncertainties on the horizon,” said Somasundaram PR, Managing Director, India, World Gold Council. He said that policy restrictions have had little impact on demand for gold, though sources of supply have increasingly shifted to unauthorised channels. “It is time for a long term approach to gold in India. As a nation we need to focus on measures that will unlock the potentially transformative value of the gold stored in millions of private households in order to fund the nation’s growth,” he added.