Dhanteras, the auspicious time of buying expensive metals, saw gold weighing around 30 tonnes this year, which is more than expected. India Bullion and Jewelers Association (IBJA) national secretary Surendra Mehta gave this information. Mehta said that about 40 tonnes of gold was sold in India on Dhanteras during the past years, but this year the price of gold was high and, due to lack of liquidity in the market, it was expected to be around 20 tonnes.
There were special offers on the purchase of gold on Dhanteras, including from banks, but that happens every year for the occasion. The unexpected high sale of the metal has taken the business class by surprise as they were on the forefront in the whisper campaign saying the market has been uninspiring.
How was the price of gold?
Of course, the sales were 25% weaker than the figures of last year. This year, the price is higher by about Rs 7,000 per 10 grams in the domestic market than last year. Shopping has been slow due to the high cost of gold. Mehta, however, said that a few days ago there was not even a possibility of such a purchase, as the yellow metal was seeing a weak demand at a high price in the domestic bullion market.
Mehta said, “The price of gold in the international market has been high this year and the import duty on expensive metals in India has increased. The price has gone up in the domestic bullion market.” He added, “While people are short of cash.” Therefore, the demand was believed to be weak at the beginning of the festive season, but the buying in the past three-four days has amounted to almost 30 tonnes of gold purchase this Dhanteras.
Weak demand for gold
Earlier on 8 October, Mehta had said, “Due to a weak demand this year, it seems that barely 20 tonnes of gold will be sold in the bullion market across the country on Dhanteras.”
Ajay Kedia, director of Kedia Advisory, also estimates that the Indian bullion market has been 25% weaker than last year. However, he said that the confidence of small investors towards investment in banking schemes has decreased after the scam in PMC Bank unravelled, due to which the tendency of people to invest in expensive metals had increased. He said that in the era of global economic recession, gold remained a better investment option.
Price higher than Dhanteras last year
Anuj Gupta, deputy vice president (currency and energy research), Angel Broking, said, “The Indian currency rupee has strengthened against the (US) dollar during the last few days, which has supported the demand for expensive metal in the domestic bullion market. However, due to better returns in gold this year, investment demand in the yellow metal has increased, he said.
After Prime Minister Narendra Modi came back to power, the newly formed government presented the full Budget of the current financial year in July, raising the import duty on expensive metals from 10% to 12.5 per cent, making gold costly in the country. This was done ostensibly to reduce the import.