Gold prices are soaring, and instead of causing demand to slow down, the opposite is happening, as it does often, when it comes to gold sales in India, discovers R Sugandha
Earlier this December, the Multi Commodity Exchange (MCX) witnessed a significant upswing in both gold and silver prices, marking a notable event in the precious metals market. Gold futures, with a maturity date set for February 5, 2024, were quoted at Rs 62,310 per 10 grams on the MCX. This represented a modest, yet noteworthy, increase of Rs 125, or 0.20%, compared to the previous close at Rs 62,311.
Prices up, up and away
In the retail sector, the allure of the precious yellow metal reached an unprecedented level, soaring to an astounding Rs 64,045.00 for 10 grams of 24k gold (99.9%) in Mumbai. The intricate dance of gold and silver prices in India unfolds against the backdrop of diverse factors, including the valuation of the rupee against the dollar, and global demand. These influential elements significantly shape the observed trends in precious metal rates, creating a dynamic environment for investors and consumers alike.
Anand Prakash of Abhushan Jewellers, Agra, [L1] provides an insightful commentary on the cultural significance of gold in the Indian context. "Gold transcends its role as a mere commodity; it is deeply ingrained in our traditions," he explains. "Its liquidity and cultural significance position it as the preferred investment for common people. Over the past two decades, the consistent upward trajectory of gold prices has not only bolstered confidence in the yellow metal, but has also solidified its status as a reliable investment avenue," he adds.
Dr Pratap Kamath, Abaran Timeless Jewellery, Bengaluru, talks about the recent hike in gold prices, attributing it to the downward revision of interest rates by the US Central Bank, a move that reduced the holding cost for metals and triggered heightened speculation. Dr Kamath says, "Consumers may find it prudent to reassess their budget for gold investments. Nevertheless, gold remains a positive investment option, demonstrating promising growth rates in the foreseeable future. The interplay of global economic factors underscores the dynamic nature of gold as an investment option, and highlights its continued relevance in the financial landscape."
Sharing his insights, Dr Saurabh Gadgil, PNG Jewellers, Pune, talks about gold prices surpassing Rs 64,000, reaching an all-time high. He attributes this surge to the anticipation that the US Federal Reserve would cut rates in the next financial year, thereby bolstering gold prices. Despite concerns about a potential slowdown in the US economy and the prospect of credit losses and bank issues, Dr Gadgil believes this is a favourable time to invest in gold, as the metal remains in a bullish phase.
According to Sumeet Anand of Punjabi Saraf Jewellers, Indore, “I have noticed that with a hike in gold price, demand for gold usually increases. One sees a lot of affluent consumers come forward to buy more gold, primarily because the value of gold, and, thereby, their ability to flaunt their wealth, is enhanced. In the coming two to three years, I feel the price of pure gold will touch Rs 1 lakh for ten grams. It also improves economic stability and adds to government coffers as well.”
Geopolitical tensions main reason of price hike
Anand agrees that the reason for the current price rise is the geopolitical tensions across the world. These tensions will alleviate with time; however, the increased value of gold will remain unchanged.
Sums up Anantha Padmanabhan, NAC Jewellers, Chennai, “The recent undulations in gold prices, shaped by global economic dynamics and geopolitical tensions, underscore the enduring appeal of this precious metal. Beyond being a mere financial instrument, gold serves both as a cultural symbol deeply ingrained in traditions, and a prudent investment choice, maintaining its allure in the ever-evolving landscape of the financial markets.”
Jewellers are unanimous in their opinion that the lure of gold will not diminish, and Indians, being the leading consumers of gold, will continue to invest in this precious metal, regardless of its price.
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