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Price fall triggers gold rush

If you want to buy gold before Diwali, don't wait too long. Or you may have to wait longer.

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But there's a two-week wait as suppliers run out of stock.

BANGALORE: If you want to buy gold before Diwali, don't wait too long. Or you may have to wait longer.

Even as banks rush to announce schemes to sell gold coins of various denominations to retail buyers, the supply chain that feeds the retail chain is running seriously short of the metal. Big buyers may face waiting periods of up to two weeks for fresh orders as stocks in the pipeline dwindle.

With the Shraadh period — considered inauspicious by many communities — coming to an end, there has been a sharp spurt in the demand for gold coins and bars, which has created a supply shortage. Vijay Kapoor, a senior executive in the bullion trading department of Metloy Trading, the Indian representative of Swiss gold refiner Pamp, said he does not have ready supplies of gold. Nor do other suppliers such as UBS and Credit Suisse.

The demand spike has been triggered by a recent fall in gold prices. After zooming to Rs10,665 for 10gm in May, gold has fallen by more than 15 per cent, and was quoted at Rs8,885 in Indian markets on Monday.

Rajesh Mehta, chairman and managing director of Rajesh Export, which sells Rs18 crore worth of gold in normal months, has seen sales jump up by around 25 per cent in September. According to him, demand for gold coins and bars is coming mainly from Kerala and Tamil Nadu. In the international market, his company has registered high sales in Singapore and West Asian countries.

Banks retailing coins and bars have also witnessed a big jump in demand. Chitra Pandey, head of retailing and payment products at HDFC Bank, said sales this month have been twice as large as those in the previous month. “We are expecting to close this month with a growth of 200 per cent in gold coins and bars,” she said.

"Stabilisation in gold prices and the festive season have given retail investors an opportunity to invest in gold.”

HDFC Bank, which sells gold in 5gm, 10gm and 50gm coins and bars, has come out with Durga-embossed coins in Kolkata, and plans to offer Guru Nanak coins in Punjab. Kotak Mahindra Bank announced the launch of coins in the 5gm to 100gm range on Monday.

Metloy Trading says the rise in demand may have to do with people staying off gold for too long when prices were high. “With prices dipping to $580 levels per ounce, the metal merits investment,” said Rajesh Khosla, Metloy managing director.

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