Indians rush to buy more gold during festive period
Despite a huge jump in gold prices , Indians thronged gold markets all across the country on Monday, with serpentine queues outside retail outlets way past midnight, buying up gold coins rather than gold jewellery.
Posted: Tuesday , 25 Oct 2011
MUMBAI - -
If any more proof was needed about India's craze for gold, one just has to look at sales in just one city for just one day. Nearly 35 kilograms of gold was sold on a single day on Monday, earning more than $1.8 billion for traders on the highly auspicious Dhanteras, the day preceding Diwali.
Even as Indians get ready to celebrate the festival of lights Diwali on Wednesday, October 26, the people of Chandigarh in Punjab have shown the intensity with which the yellow metal continues to be revered in the country by buying up massive quantities of gold on Monday
As for the rest of the country, traders are as yet unwilling to hazard a guess about sales given that just one day has gone past. ``We were under the opinion that high prices and fluctuations in the price of gold would deter many consumers. But they have made a beeline to jewellery stores and sales have been brisk especially in North India,'' said Sunderlal Singh, bullion trader and gold jewellery retailer in Mumbai, who opened three stores in the last year in North India.
He noted that people preferred to purchase gold coins this time instead of spending on jewellery, given the high cost of gold in addition to the making charges levied by different jewellers. Coins were available in sizes ranging from half a gram to 50 grams.
As the word suggests, Dhanteras celebrates wealth. Though most people flock to jewellers and buy gold or silver jewellery to mark the occasion, many also shop for electronic goods, automobiles or even utensils to venerate the occasion of Dhanteras in India.
On Monday the price of gold shot up to $526 for 10 grams of 22 carats, while it was $363 last year on Dhanteras day, said traders. On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at $1,659.05 during early trading hours in Europe, climbing 0.41%. It had earlier risen by as much as 0.68% to trade at $1,664.65, the highest since October 19.
The glitter of gold shone brightest in Mumbai, considered the financial capital of India. Prithviraj Kothari, president of the Bombay Bullion Association said sale of gold coins this year were the best in at least threein Mumbai during Dhanteras.
The festival of lights is normally considered an auspicious time to splurge on the precious metal. ``This season, some jewellers feel that sale volumes could be down by 20% to 30% as compared to the previous year's Diwali season, but the value would be higher owing to the increased rates,'' Kothari said adding that gold exchange trade funds sales had also peaked.
Analysts said strong Indian demand kept gold premiums high across Asia for all of Tuesday. While premiums in Hong Kong were around $2 per ounce above spot gold, in Singapore the gap between deal prices and spot gold was around $1.50 per ounce.
In Mumbai, demand for gold coins was so high on Monday that serpentine queues were witnessed outside big jewellery outlets late in the evening, snaking over half a kilometre outside many stores.
``There is an auspicious period when one can buy gold and most consumers insisted on waiting for the appropriate time to bring in the precious metal. Buying it at a certain time during the day would ensure that prosperity and good health would be bestowed on the owner,'' said Ramnikbhai Jhaveri, bullion retailer.
Several stores announced a slew of interesting schemes to bring in more footfalls. While some stores advertised heavy discounts on making charges, others promised to give away expensive gifts on amounts exceeding a certain figure, including air tickets to exotic locations. Traders said that some stores in Mumbai were forced to remain open past midnight given the density of the crowds.
Public sector banks and private banks too decided to honour the ocassion by selling gold coins and gold biscuits from specially designated counters. Several people from the corporate world prefer to buy gold coins from banks since they are assured of purity and get a certificate of the exact caratage.
The coins cell of just one branch of State Bank of India managed to sell around 4 kilo of gold coins on Monday with bankers saying the crowd was almost double as compared to last year. Several other public sector and private sector banks including Punjab National Bank and HDFC Bank had opened special counters to sell gold.
Moreover, as compared to last Diwali, traders and jewellers noted a high turnover in terms of cash sales rather than plastic money being used. ``Many people preffered to pay cash rather than use the credit card. Cash sales were up by at least 20%,'' said Sonubhai Trivedi, bullion trader.
Though purchases on the auspicious gold-buying day of Dhanteras were slow in the initial hours of October 24, with prices ruling almost 40% higher than last Diwali in some cities, traders said sales picked up during the day. Traders said they were expecting a robust season with around 30% spurt in sales all throughout this week.i
iPad Version - Bank employee holds a 500 gram high purity 999.9 hallmark gold ingot before selling it to a client at a Sberbank office :Ilya Naymushin / Reuters