Falling gold prices excite gold smiths

The gold prices fell to their lowest in six months this week raising hopes amongst gold smiths that sales may go up.

All Kashmir Gold Dealers’ and Workers’ Association on Sunday said that “It is a good sign for the gold dealers that the rate has come down by Rs 700 per 10 gram.

All India Akhil Bhartiya Swarankara Sang (ABSS) president said that 22 carat’s gold rate was earlier Rs 28,000/ten gram. Earlier the rate of 24 carat gold per 10 gm was Rs 31,000, which has now plummeted to Rs 30,300”.

However, experts speculate that the dwindling price of gold would not attract many new buyers and even if buyers purchase some gold, the increased demand would not offset the reduced price as marginal propensity to consume gold is rather inelastic. One expert said; “it is true that the prices have come down to the lowest level in the last six months this week, yet they are too high to be affordable for a common consumer.

During the last two years since gold has come on the commodity market, there has been continuous upsurge in the prices which has added to the woes of gold dealers as well as for the customers. Due to gold’s online trading, the price volatility has marred the gold market and it has brought margins under strain.

Tariq Ahmad, a jeweler said: “We are hoping that the rate of gold will decline further as it would increase the interest of investors as well as buyers.”

Many jewelers said that the continuous price fluctuations have brought about uncertainty in the market. Fayaz Ahmad, a jeweler said that “customers delay the purchase of gold with expectations that prices may further come down”.

The jewelers said the high gold prices had boomed scrap sales. “We get more customers who sell their old gold ornaments and jewelry when the prices inflate” said Ali Muhammad, a goldsmith.

Experts believe the gold prices had gone up in the past years because investors employ it to hedge their financial market investments.

Pertinently, the rupee, which fell nearly 1 percent, plays an important role in determining the landed cost of the dollar-quoted yellow metal. Globally gold slipped nearing a four-month low and the latest decline in value is the steepest weekly drop since June, as the euro softened and U.S. talks to avoid a fiscal crisis stalled again. NNI