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Abhrajit Gangopadhyay
Boby Kurian

Bangalore , Dec. 16

RETAIL off-take of gold has fallen sharply tracking shooting gold prices even as the marriage season in NorthIndia nears end and the inauspicious month sets in the southern part of the country, traders and jewellers said.

However, selective buying of bridal jewellery was on, though at a much smaller scale than previous year, they added.

"We hear of a very marked slowdown in retail take off in the North," Mr Vasant Nangia, Chairman, Oyzterbay Pvt Ltd, a branded gold jewellery chain, said.

"As people trade to lower-priced products, brands like ours would benefit and we have seen growth this year," he added. The bulk of Oyzterbay's gold offerings fall below Rs 5,000. The worst affected would be the "smaller lot of traditional jewellers" as the bigger traditional players showed a broader product and price spread, Mr Nangia said.

"Sales over the counter has fallen by as much as 40 per cent since the price went up in the last fortnight. The price was too steep for many," Mr Harish D.V., Partner, Davanam Jewellers Pvt Ltd, a jeweller and gold exporter, said. Exports had also been severely affected tracking the steep price hike, he said. "Our exports are down by close to 30 per cent," he added.

Traditional jewellers normally see spurting sales during marriage season as gold purchased is mainly from the investment perspective and not driven by fashion or lifestyle.

Industry watchers said consumers showed withdrawal symptoms, as they remained unsure about the stability of prices. But market forecasts on prices staying firm in the coming months could make the current retail downturn a short-lived one.

The slackening of retail demand comes at a time when rural demand driven by rising economy and stability in consumption over the last few quarters should have pulled up sales in the busy November-December season.

Spot prices also soared significantly on the back of global tension following the US invasion of Iraq and corroding confidence on the US dollar, which made dollar-priced gold cheaper for euro and yen holders.

However, gold bullion futures prices bounced from Rs 6,097 per 10 gm at the end of Monday's maiden trading on the National Commodity and Derivatives Exchange Ltd(NCDEX) to Rs 6,120, traders said.

However, traders expect spot gold to stay range-bound within $400-$410 per ounce in near term. "It is too early to comment on the futures price direction," Mr Srinivas of Sheshanka Financial Services, a trading member on the NCDEX said.

However, higher prices have prompted people to sell old and damaged jewellery. The supply of scrap gold in Mumbai, that accounts for close to a quarter of the country's demand, had topped 100 kg per day from a mere daily 35 kg a month ago, traders said.

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