The drop in gold prices, amounting to ₹1,130 per 10 gram since the beginning of this month, has uplifted sentiments leading to a potential revival of sluggish jewellery sales and increased demand for digital gold this Dhanteras.

Gold prices have fallen to ₹60,240 per 10 gram on Friday from ₹61,370 logged on October 31 as concerns over the US slipping into a recession eased on positive economic data.

The Israel-Hamas conflict poses a significant threat to the global and West Asian economy, disrupting the US and other economies’ recovery may push up the price of the haven metal.

Also read: Investments push up gold demand 10% in Sept quarter

Suvankar Sen, Managing Director, Senco Gold & Diamonds, said jewellery sales was up 12 per cent in value terms but was in low single digit in volume due to the recent fluctuations in its prices. “Overall sentiment was positive despite the challenges of high prices and global uncertainty,” he said.

Saurabh Gadgil, Chairman, PNG Jewellers, said according to industry estimates the overall gold consumption will cross 40 tonnes of which nearly 8-10 tonnes will be consumed in Maharashtra alone.

Gold ETFs shine

Besides coins and bars, digital gold, especially in the form of exchange traded funds, has drawn huge traction for sheer convenience.

Gold ETFs function as electronic representations of physical gold, securely stored in demat accounts. These ETFs are listed on stock exchanges and provide real-time price updates, making them a convenient choice for investors.

Haven appeal

Somasundaram PR, Regional CEO-India, World Gold Council, said anecdotal feedback from industry suggests that gold is seeing strong interest, though consumers remain intensely price conscious due to price volatility in the near-term. He mentioned that the strong case favouring gold among professional investors as a means to mitigate portfolio risk is also highly favourable for the current demand for gold.

Also read: Gold ETFs add more glitter this Dhanteras!

Investment in gold ETFs has jumped to ₹841 crore last month from ₹175 crore in September, according to the Association of Mutual Funds in India data. In fact, buying in Gold ETF zoomed to ₹1,028 crore in August amid the geo-political tension.

Melvyn Santarita, Analyst, Morningstar Investment Adviser India, said the appeal of gold as a haven and hedge against inflation is expected to continue with ongoing geo-political tensions, inflation still higher than expectations, and growth rate slowing down. Moreover, he said gold prices have come off from their recent peaks providing some buying opportunity, particularly after a sharp rally it witnessed since March this year, he added.