Gold flow into Bangalore has nosedived. The City, which would get 500 kilos or half a tonne of gold a day, has been getting less than 100 kilos now, affecting the jewellery trade.
Prices of gold products are going up, people are not buying as much as before, waiting for a fall. The bullion business, top jewellers say, is down by 70 per cent in the City. And Karnataka, which would see daily trade of one tonne of gold or 1,000 kilos, is now seeing less than 25 per cent of it.
The acute non-availability of gold in the City and other regions is due to RBI restrictions that allow only 40 per cent of the gold imported in the previous year and the extent of gold India usually trades in. India usually consumes 900 tonnes of gold a year, which is 75 tonnes a day. Now, the country is getting less than 300 tonnes. When there is shortage of gold supply, prices go up.
It is profitable for jewellers to sell gold at a higher price, but the same high price has driven away customers, who are looking for prices to come down. Bangalore is seeing very sluggish business at just quarter of its normal turnover, Bangalore Jewellers’ Association Secretary D V Ramesh told Deccan Herald.
While international prices fell from Rs 1,350 a gram to Rs 1,283 a gram, domestic prices went up. The price of gold in Bangalore went up to Rs 2,835 per gram from Rs 2,700 a gram – a Rs 135-increase per gram.
This is due to the rising rupee against the dollar, apart from shortage of gold itself and import restrictions. Rising rupee means jewellers have to pay more for gold they purchase to sell in Bangalore.
Ramesh says customised jewellery sales have been hit. “When people come asking for particular rings, bangles and necklaces, in many cases we are unable to meet their requirement or execute the orders, because the particular type of gold they look for may not have come in the lower supplies to the City. But when the supply is regular and normal, we can meet all requirements because different gold types would have come in.”
Good sales though are expected to happen in the coming week with Akshaya Tritiya celebrations on May 2. It is a time when scores of people buy gold because they believe it is an auspicious day and buying gold would lead to further growth in wealth.
Akshaya Tritiya is when jewellers give huge discounts. This year though, the extent of discount may be lower because of gold shortage. Jewellers say they have to sell whatever they can at whatever the price to get some income, which is better than nothing coming their way. Meanwhile, private individuals and banks are making a profit from gold.
Jewellers told Deccan Herald that many banks have been selling gold they have in their vaults at a premium price to jewellers who show interest in purchasing the metal.
“Banks propose prices as high as Rs 100 per gram for normal gold. Individuals who have vast reserves, also sell it to us at a premium. Both banks and individuals are making a profit in times of low availability,” a jeweller, who did not want to be named, said.
The shortage of gold has also led to smuggling, a jeweller said, with scores of small packets of gold coming into the State – from coastal as well as hinterland.
The jeweller, who sought anonymity, said smugglers become active as soon as they hear of RBI guidelines.
Once restrictions are imposed on import, they start operations. Generally there’s a lot of gold traded from Dubai, Abu Dhabi, Muscat and Sharjah apart from a few southeast Asian countries. The routes, the quantity, texture of gold, destination are all decided immediately. Because these are well-tested routes, not much planning is needed.
