The sharp rise in gold prices on the back of the raging war between Israel and Hamas is set to hit jewellery sales during the upcoming peak festival season of Dhanteras and Diwali.
Gold prices have jumped three per cent, or by ₹1,819 per 10 gram, to ₹58,396 on Friday from ₹56,577 on October 3, according to Indian Bullion and Jewellers Association data.
On MCX, gold for December delivery was up ₹687 per 10 gram, or two per cent, at ₹58,605 on Friday.
Impact on sales
Suvankar Sen, Managing Director, Senco Gold and Diamonds, said the rise in gold prices will have an impact on the volume of jewellery sales by the industry, but it will also push consumers sitting on the wall expecting a fall in prices to take the plunge and buy jewellery before it becomes more expensive.
“Irrespective of prices, it has been a tradition for consumers to buy gold during Dhanteras and Diwali, and we believe that this will continue. The focus will be more on diamond jewellery as diamond prices have come down in recent months,” he added.
In fact, gold prices have reversed its bearish trend for most of the last month after the outbreak of geopolitical tension and worries over the US economy. The fall in yellow metal prices last month had boosted consumer sentiments closer to the peak festival and wedding seasons.
Gold prices had plunged by ₹1,535 per 10 gram to ₹57,760 on September 29 from ₹59,295 logged on September 8.
However, Israel intensified its war on Hamas on Friday by directing over 1 million people to evacuate from the north Gaza strip as it prepared for a ground attack. The battle between Israel and Palestinian militant organisation Hamas entered its seventh day, claiming 1,300 lives and over 3,300 injured.
On the economic front, the war is expected to push up crude oil prices over $100 a barrel and enhance the safe haven appeal of gold. Commerzbank, the leading German bank, has estimated gold prices to touch $2,100 a troy by the end of next year.