Gold buyers trickle in a day before key festival

Gold buyers trickle in a day before key festival

Mumbai: Consumers trickled in to jewellery shops and banks, more to buy coins and bars, a day before the key Dhanteras festival despite the near record high prices, traders said on Tuesday.

“Retail sales have picked up from Saturday. Small denomination coins are doing very well. We expect our sales (of coins and bars) to grow by over 10 percent," said an official with Union Bank of India.

“In smaller towns, people prefer coins and bars as investment compared with ETFs," said the official.

The bank has offered a discount of 2 percent on coins.

The benchmark gold contract on the Multi Commodity Exchange (MCX) was steady at 19,745 ($444.91) per 10 grams, still down 1.4% from the all-time high of 20,028 hit on 14 October.

On 3 November India celebrates Dhanteras, when jewellers in the country register the highest gold sales in a year, and on 5 November Diwali.

The yellow metal is a sign of prosperity in India, the world’s largest consumer, and people buy it during these festivals.

Banks, and jewellery shops, are decorated with marigolds for the festival, and typically remain open till late evening on Dhanteras and Diwali, when establishments witness the highest footfall.

“The footfall is increasing by day, and tomorrow would be the highest. We hope Dhanteras would be better than last year, but the proportion of bullion sales to jewellery sales would definitely be higher," said Ashish Pethe, partner at Mumbai-based retailer, Waman Hari Pethe Jewellers.

Gold sales during 31 Oct-6 Nov may rise by up to 40% on year, supporting the outlook for record imports in 2010, a senior World Gold Council (WGC) official said in an interview on Thursday.

Indians traditionally buy gold jewellery, which is the most common gift during religious events and an essential wedding present, but buyers are becoming increasingly aware of the benefits of holding gold in other forms like bars, coins and Exchange Traded Funds.

“The retail segment has picked up giving us a push in sales before Dhanteras," said a official with bullion importing state-run bank in Mumbai, which also sells coins and bars, adding “there was wholesale buying until last night, we booked around 100 kgs at $1,352/1,353 (an ounce)."