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Global gold supplying banks’ decision to divert the yellow metal marked for delivery in India to China and Turkey is unlikely to move a needle in jewellery supply or demand during this festival and wedding season.
Most of the jewellery manufacturers in India have already stocked up ample gold more than a month ago in anticipation of better demand and circumvent steady depreciation of the rupee against the dollar which makes imports costlier.
Kumar Jain, national spokesperson, India Bullion and Jewellers Association, said the decision to divert gold supply from India will not have any impact on India, whatsoever, as jewellers plan for festival season sales at least one or two months in advance and there is enough supply of bullion across the globe.
India, which imports about 800-900 tonnes of gold annually, is the second largest importer after China and there is also domestic supply of 250-300 tonnes through recycling of old jewellery, he said.
With Indian households’ gold holdings at an estimated at 25,000 tonnes and 500 tonnes of gold jewelleries hallmarked annually, there will never be a short supply of gold due to some tactical decision of few global gold suppliers, stressed Jain, who runs a jewellery showroom in Zaveri Bazar, the heart of gold trade in Mumbai.
Economic turbulence
The large-scale gold imports in Turkey and China are largely due to their economic turbulence, said a banker, who did not want to be named.
Turkey’s gold imports surged over five times to $3 billion in September, as its annual inflation accelerated to a fresh 24-year high of 83 per cent with transport prices increasing 118 per cent and food and non-alcoholic drinks climbing up 93 per cent.
Despite surging inflation, Turkey’s central bank reduced interest rates from 14 per cent to 12 per cent and the country’s President promised further cuts.
Similarly, China has restricted gold supply by allowing only accredited banks to import gold with quantities set by the People’s Bank of China. With a sharp slide in the value of the yuan against the dollar, spot gold prices in dollar terms dropped over 8 per cent in September quarter and it was less than 3 per cent in yuan.
In contrast, , India is bracing for a huge wedding season with 155 muhurat or auspicious days for weddings in the currently Hindu calendar year whereas it was 85 last year. On muhurat day, said Jain at least about 25 weddings are performed and all these will boost gold sales.
Suresh Kumar, a Bangalore resident, had travelled all the way to Mumbai’s Zaveri Bazar to buy the latest fashion jewellery for his daughter’s wedding. “We make the trip to this particular shop in Zaveri Bazar as the quality and design are very good and they offer one per cent discount on overall bill,” he said.
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