Gold sales up 6% during Diwali

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Discounts, special buyback offers lure buyers.

People prefer to buy light weight jewellery. There was also buying interest in gold coins of smaller denomination.

Suresh P. Iyengar
Shobha Kannan

Mumbai/Kolkata, Oct. 21 High prices seem not a deterrent for customers when it comes to buying gold, particularly on auspicious occasion such as Diwali and Dhanteras.

Despite high prices, gold sales across the country during the Diwali week ended October 18 were marginally higher by six per cent at 56 tonnes against 53 tonnes during the same period a year ago, according to the World Gold Council, an industry association of the world’s leading gold mining companies.

Promotional offers

Mr Darmesh Sodah, Director of the World Gold Council, said various promotional events organised by the Council seems to have paid off as customers kept their faith in gold despite high prices.

Many of the retail jewellers gave discounts besides special buyback offers to attract investors. Auro Gold, which came out with a buyback offer, sold 200 kg of gold coins and 2.5 kg of silver coins, a rise of 10-20 per cent compared with last year.

Mr Ritesh Jain, Managing Directors, Auro Gold, said: “We collected only 20-30 kg of gold though the buyback was a clear indication that customers are expecting gold prices to rise further.” Similar sentiment was expressed by most of the jewellers.

“People preferred to buy light weight jewellery, largely diamond studded during this festival season. There were also buying interest in gold coins of smaller denomination,” said Mr Harish Shah, a Mumbai-based jeweller.

Mr Tarun Satsangi, Assistant Vice-President, Bonanza Commodity Broker, said gold prices have risen to about Rs 16,000 for 10 gm this Diwali compared to Rs 12,000 and Rs 12,200 last year. However, rise in silver prices were moderate by Rs 1,100 a kg to Rs 27,500 a kg.

Low Demand

Though sales at the jewellers end has come off unscathed, gold demand from bullion traders has remained low.

Quoting from the Bombay Bullion Association data, Mr Prithviraj Kothari, Director, Riddi Siddhi Bullions, said sales in the bullion market was down 30 per cent to 50 tonnes during the Diwali month which started from Dasara.

Traders expect a fall in gold prices in the short-term as it has gone up steadily in the last few months without reflecting the drop in the international markets, largely due to weak dollar against rupee.

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(This article was published in the Business Line print edition dated October 22, 2009)
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