Chennai: Fluctuating gold prices have had a mixed impact on jewellery shop owners, pawn brokers, customers and gold finance companies.
“We have witnessed a 30 percent dip in gold sales due to Coronavirus” said Jeetender Kumar Gupta, owner of Lalithaa Thanga Maaligai, Alandur. Before Coronavirus emerged in December 2019, 22 carat gold was priced around Rs 3700 per gm but now it is priced around Rs 4200 per gm, he added.
The rise in the price of gold has also affected the trade of 24 carat gold, said Gupta. Before Coronavirus arrived, 24 carat gold was priced around Rs 4000 per gm, now it has risen to around Rs 4500 per gm.
Gupta added that the price of gold in Chennai is fixed everyday by the Madras Diamond and Gold Merchants Association.
Baashim Kumar, one of the trustees of Madras Diamond and Gold Merchants Association said that the fluctuation was due to the recent 50 basis points cut by the Federal Reserve, USA. He added that many gold investors were selling in the open market due to the fluctuations.
The rise in gold price has not affected my daily sales, says L. Srinivasan, owner of Rasi Jewellers, Adambakkam. “My turnover is proper and my investment is smooth”, he added.
Srinivasan attributed the hike in price of gold to the weak performance of the rupee. He anticipated the price to hit Rs 5000 per gm in the days to come.
He also said that the demand for gold in Chennai is very high as people purchase gold jewellery for ornamentation, showing their status and also for investment purposes. Gold is purchased not only for weddings and festivals but also on Akshaya Tritiya when lot of discounts and exciting offers are given to attract customers.
“I am selling gold at a discounted price for Women’s Day to increase my sales”, he added.
The rise in the gold price has not spared even pawn brokers. “My margins are dipping”, says Sunil Kumar Jain. Jain added that the main reason for the rise in gold prices was due to the competition in the market. “Though I am reselling gold purchased outright from individuals at a lesser price per gram, the volumes are still the same despite increasing my business timings”, he added.
“We have witnessed a 20% decline in gold loans due to the rising gold prices”, said Sathish Kumar, Manager of Manappuram Finance Ltd, Adambakkam.
Kumar pointed out that with the increase in gold rates, the pledgers have an advantage when they take a loan. With the decline in gold price, the pledgers have a disadvantage and the company has an advantage. Pointing out the flipside in gold financing, he said that it is becoming increasingly difficult to recover gold loans.
We are modifying our interest rate schemes to solve the crisis, he said.
“I just cannot think of buying gold when the price is so high”, said Vinupriya (35), a homemaker, who had come to buy a ten sovereign gold chain at Lalitha Thanga Maaligai.
“Despite the high gold prices, people will invest in it as it is the safest investment given the current economic slowdown”, says V. Sathish Kumar, Assistant Professor, Economics Department, Loyola College. “More than the customers, I feel that the industry is getting affected due to factors such as the US-China trade war, 12.5% import duty and 3% GST on gold”, he added.