Gold on fire before Diwali

10 gms costs Rs10,000 in city, traders fear festive sale may dip

MUMBAI: Soaring crude oil prices and a weakening dollar have sent the price of gold soaring to a 28-year high, both in India and abroad. With Diwali knocking on the doors, 10 gram of the dazzling yellow metal costs Rs10,000 in Mumbai. Domestic dealers are apprehensive that the rise in international prices to $700 per ounce would have a rub-off effect here.

Suresh Zaveri, a Vile Parle jeweller, said, “Customers are reluctant to buy gold because of the high price. While their number has not dropped, they are buying in lesser quantity.” Jewellers believe that the festive season will see 500-600 kg of gold being sold instead of the usual one-tonne Diwali sale.

Samrat Zaveri of Tribhuvandas Bhimji Zaveri, one of the biggest jewellers in India, said the current resistance among buyers was a temporary phenomenon. “I do not think it will have a major impact on the sales. The high prices have instead, revived the consumers confidence of getting good returns on their investment,” said Zaveri. He added that the gold prices would rise to Rs13,000/10 gm in the next six months.

Gitanjali Group chairman Mehul Choksi said, “Crude oil and dollar risks are being hedged in with gold. This is sending gold demand and prices northwards.”

Ashok Minawala, director of Danabhai and Sons, said, “Gold has always been considered to be a safe haven. Therefore, even if the prices are high, consumers will always buy gold.  However, the quantity could
be less.”