Jewellers at Mumbai's Zaveri Bazaar have never had it so good.
With gold prices touching a record Rs 30,300 for 10 grams, people have been rushing to sell jewellery at the hundred-or-so gold outlets in Zaveri Bazaar, Mumbai's gold trade hub.
Merchants say that each outlet has been getting 4-5 kg of gold jewellery every day.
Although prices have since dropped to the Rs 29,200-levels, serpentine queues have been the order of the day at these outlets — helped by the fact that jewellers here pay in cash for the gold they buy.
Mr Anish Jain, Director, Jugraj Kanulal & Company, says business picks up whenever gold prices cross a benchmark — and then people raise the bar as they expect it to rise further.
Mr Venkatesh Prabhu, a bank employee, is one such expectant seller.
Gold coins
Mr Prabhu says he wants to encash gold coins totalling 25 grams, which he had bought at different price levels — starting from Rs 2,000 for one gram.
Having missed the Rs 30,000-level, he is now waiting for prices to touch Rs 35,000. Mr Jain says he remembers buying around 20 kg of gold in just a day, some 8-10 years back when prices had crossed the Rs 10,000-mark . In fact, offtake in the previous week would have been even better had it not been for the summer holiday season last month, Mr Jain says. So, what do the merchants do with the gold that they buy? It is usually converted into gold coins.
“Many customers also buy gold coins while selling their old gold jewellery. Though gold coin sales pick up during the festival season, we sell 300-400 grams a day,” he says.
Rupee depreciation
The rupee's depreciation versus the dollar has been the key reason why domestic gold prices have been shooting up. The rupee has dropped six per cent against the greenback, to 56.06 from 52.73 in May.
Being a dollar-denominated commodity, gold prices are seen on the up whenever the rupee depreciates.
It is widely expected that the Reserve Bank of India will take measures to support the rupee. If that is done, then it is likely gold prices will fall.
On Friday, gold prices dropped by Rs 700 (for 10 grams) to the Rs 29,500-level, recording its second biggest single-day fall this year.