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Dhanteras adds shine to gold sales

Dhanteras adds shine to gold sales
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First Published: Thu, Nov 04 2010. 12 34 AM IST
Updated: Thu, Nov 04 2010. 12 34 AM IST
Mumbai: Gold sales are seen gathering pace all through Wednesday with traders and retailers expecting volume to rise up to 20% despite near-record prices as customers line up to make the most of the auspicious Dhanteras festival.
“Mood among customers has been very positive after a good monsoon, and there is no resistance to these high price levels,” said Chinatamani Kaigaonkar, managing director at Chintamani Jewellers, a gold retailer.
Jewellery shops and banks were open until late in the evening as country is in midst of the festival week, with Dhanteras, the busiest gold buying day, on Wednesday, and Diwali on Friday, when demand for the yellow metal peaks as it is considered auspicious and invokes lasting prosperity.
Gold sales during last year’s Dhanteras-Diwali week rose by 5.7% to 56 tonnes, and the World Gold Council expects sales to jump by 40% this year.
Gold on Multi Commodity Exchange (MCX) was trading at 19,701 rupees ($444) per 10 grams on Wednesday, still down 1.6% from the record high of Rs20,028 struck on 14 October. Prices have gained 22% on year.
The demand is expected to continue beyond this week as weddings will last until December. Adequate monsoon rain is also seen boosting incomes in rural areas, which accounts for 70% of the country’s gold demand.
Bank officials said there has been growing interest in coins, bars and Exchange Traded Funds from cities as moneyed consumers seek to safeguard wealth and seek higher returns to beat rising inflation.
“Gold is selling like hot cakes, we have very little stock left... we are running out on smaller denominations coins,” said an official with ICICI Bank, which offered coins and bars embossed with images of Hindu diety Ganesha and Godesses Lakshmi and Saraswati.
ICICI Bank offered a discount of 4% on coins and bars, among others, while other jewellers also offered discounts on making charges.
Indians traditionally buy gold jewellery - a common gift during religious events and weddings - but buyers are becoming increasingly aware of the benefits of holding gold in other forms like bars, coins and Exchange Traded Funds. “Coin and bar sales have been good this time and last year demand for 20 grams and 8 grams coins bars had been good. We expect this trend to continue, and expect sales to rise by over 10%,” said an official with a state-run bank in Mumbai.
In the country’s biggest gold fund, the Benchmark Gold ETF, volumes more than doubled on Dhanteras so far in the day to 133 kgs compared to a 11-month per day average of 49 kgs.
“It’s ultimately gold buying, and we offer the best and convenient way to buy online,” said Rajan Mehta, executive director with Benchmark Mutual Fund, which had 6.6 tonnes of the yellow metal in its corpus last month.
Demand for silver too is rising and traders and banks said they were running out of stocks of silver, often seen as a poor cousin to the yellow metal.
“There is a substitution demand for silver this time around, we could see 30-40% jump in sales of silver. People who used to buy 8 grams of gold coins are now buying 250 gms of silver at the same price,” said Rahul Gupta, director at Delhi-based PP Jewellers.
Silver was at Rs37,170 per kg on Wednesday, up 37% on year.
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First Published: Thu, Nov 04 2010. 12 34 AM IST