Retail buyers cheer, investors shiver as gold crashes by Rs1,000 in Ahmedabad

The Rs1,000 fall in domestic gold prices on Saturday caused widespread panic among investors but for ordinary customers it was welcome news as it made the precious metal affordable. If experts are to believed, further ‘downward correction’ will bring down gold prices by another Rs1,000.

The yellow metal saw its second biggest crash in Ahmedabad on Saturday. The price of 99.9% pure gold fell by 3.40% or Rs1,000 to Rs28,400 per 10 gram in a single day. Silver too crashed and fell by Rs2,350 in just one day to close at Rs49,300 per kg against the previous day’s close of Rs51,650.

Mumbai too saw gold prices come down by Rs1,080 with the yellow metal closing at Rs28,015 per 10 gram. Delhi witnessed a fall of Rs1,250 with gold closing at Rs28,350. In a similar fashion, the price of silver ready nosedived by Rs 2,500 to Rs 50,100 per kg.
Customers in Ahmedabad are asking whether this is the right time to buy gold.

Ahmedabad-based bullion trader, Girish Choksi, said that buyers seem to be waiting for further fall in bullion prices.

“Looking at the international market, no one has any idea how long the fall will continue. But it is bearish in the global market; hence, we are expecting a correction of another Rs1,000 in the coming days,” said Choksi.

Retailers in Ahmedabad have reported getting enquiries about price of the yellow metal. Shanti Patel, president of Gem & Jewellery Trade Council of India, said that if gold prices fall by another Rs1,000, there may be a mad rush for the precious metal.

“In the last few years, only investors and high-end consumers have shown interest in buying gold. However, with this huge correction in gold prices, we may see demand coming from the middle classes too,” Patel said.

Akha Trij, which is considered one of the most auspicious days for buying gold, falls on May 13 this year. And from that time onwards, the wedding season also begins.
Ashok Choksi, city-based bullion trader and retailer, said that buyers will certainly take advantage of the fall in gold prices for the coming wedding season.

“For the past few months, retailers have not seen a major rush or demand for gold. Next month, however, may be different, Akha Trij coupled with the wedding season and low gold prices may lead to a surge in demand,” Ashok Choksi said.

On Saturday, gold prices were falling on global cues in all the major cities of the country. On an average, they fell by over Rs1,000 per 10 gram. In Ahmedabad, the precious metal fell by Rs1,000 and closed at Rs28,400 per 10 gram.

The biggest crash in gold prices in Ahmedabad occurred on August 25, 2011. That day, yellow metal prices had crashed by 7.29% or Rs2,050, and closed at Rs26,050 per 10 gram.

Globally, gold prices had started falling on Friday itself. For the first time after July 2011, the yellow metal had tanked by 5% and slid below $1,500 an ounce. In London, it posted its biggest weekly decline since December 2011.

In the international bullion market, gold sales increased on signs that investors are favouring the dollar and equities as the global economy recovers.  Gold prices had been falling most of this week. Pressures that were building this week from several factors, including a draft plan for Cyprus to sell bullion and outflows from exchange-traded gold funds.