The Hindu Business Line : ‘Market ready to absorb gold price of Rs 1,300-1,400/gm’

Bangalore, May 2 The price of gold, which has been on a volatile rally for quite some time, is no longer a worrying factor for consumers, say jewellery retailers who believe the market is ready to absorb the Rs 1,300-1,400 (per gm) cost.

While the economic slowdown has dampened buying, gold retail prices now do not have much of a bearing on buying, says Mr Rajesh Mehta, Chairman, Rajesh Exports, which runs the Shubh and Laabh chain of jewellery stores across the country.

After touching a peak of Rs 15,800 (per 10 gm) on February 24, gold price has now stabilised at Rs 14,100. Consumers are reasonably comfortable with this rate, says Mr A. Shivram, Regional Manager, Tanishq. (Prices are expected to soften further into the Rs 13,000-region.)

But the comfort factor is seen only in the fact that gold is still the preferred mode of investment, whatever the price is. It has not translated into large volumes and value, as people are still cautious about splurging. Even Akshaya Tritiya this year was a lukewarm affair.

When gold prices where in the Rs 1,200 (per gm) levels, people loosened their purse strings more often; the value of jewellery bought was also higher.

Articulate buying

Says Mr C. Vinod Hayagriv, Managing Director of Bangalore-based jewellery retailer C. Krishniah Chetty & Sons, while the Rs 1,400 per gm rate is no more a cost to be worried about, people have become more selective and are not as impulsive as they were before, “People are not buying off the cuff. There is a clear and articulate approach to buying now.”

The year ahead will also see a mediocre run (sales could dip 15-20 per cent) unless the industry gets its act together and markets itself well, warns Mr Hayagriv. “It is important to get consumer confidence back into the product with superior quality control and promotions,” he adds.

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