<p>The Bengaluru market is showing mixed reactions to the unprecedented surge in gold prices. Pawn brokers, jewellery shops and investment advisers report that some are buying gold, while others are selling. Some are holding on to it anticipating a further increase in rates.</p>.<p>“Rising gold prices have led to increased investor interest and activity in bullion and online derivatives trading,” says Bharat Jain, assistant vice president at an investment firm. He adds that he has seen selling by ‘early investors’ — individuals who invested in gold over a year ago. “People who bought gold at Rs 55,000 last year are seeing about 100 per cent gains, and those who bought it three to four years ago will get three times their investment,” he states. From his clients, he has largely seen “profit booking and diversion to other assets”.</p>.<p>Gold Exchange Traded Funds (ETFs) are gaining more traction, he notes. In November 2015, the government introduced Sovereign Gold Bonds at Rs 2,685 per gram. “Those who possess those bonds are sitting with handsome profits now. It’s prudent to allocate part of one’s portfolio for gold to optimise risk and returns,” he points out.</p>.DH Deciphers | What is behind yellow metal's economic sheen?.<p>Vinod Hayagriv, director of a precious jewellery brand, notes that customers are waiting for prices to increase further before they decide to sell gold for profit or exchange gold. Many more wish to buy now as they believe rates are unlikely to come down anytime. “None of our customers are selling. I have not seen any encashment but the wealthier investors are exchanging gold for diamonds,” he shares.</p>.<p>This reinforces the faith in the investment value of the precious metal, Hayagriv believes. However, there has been a small decrease in quantity of gold jewellery sales: “In the past 10-15 days, sales have come down by 5-10 per cent,” he reveals.</p>.<p><strong>Topping-up loan</strong> </p>.<p>A Halasuru-based pawnshop has seen more people pledge gold after the pandemic, with a 40 per cent hike in customers over the past year. “Since loan-to-value (LTV) has increased, people are pledging gold for higher amounts. Currently, we lend around Rs 6,500/gm, but if prices keep rising, we might go up to Rs 7,000/gm,” said Sanjay Kumar Jain, proprietor. The latest trend he has observed is that of customers topping up loans by borrowing more on already pledged gold.</p>.<p>A Vasanth Nagar-based finance and pawnshop has observed a 30% hike in customers since April 2024. Abhay Kumar, proprietor, said that a liquidity crunch in the market has led to more people pledging gold recently. “The number of customers will keep rising as the gold rate increases,” he added.</p>.<p><strong>Other side</strong></p>.<p>On the other hand, a representative at a pawnshop in Nagawara says they haven’t seen enough customers since August. “Since the gold rates started increasing, people have not been pawning gold and jewellery. Why would they when they can sell it for a higher price now and buy it cheaper later, when the rates drop?” he said.</p>.<p>At a jewellery showroom in Commercial Street, around 3% of customers rushed to sell their gold in early April “when there were rumours of prices coming down”, said director Kishan Surana. “However, now as gold rates are rising, people are hopeful it will hike further and are not selling. Also, with Akshaya Tritiya around the corner (on April 30), customers have pre-booked orders and are purchasing gold,” he added.</p>.<p>T A Sharavana, president of the Karnataka Jewellery Association, said he “hasn’t seen a dip in gold sales and customers are not rushing to sell despite the current hike”. “In fact, for Akshaya Tritiya, we have seen a 25% increase in pre-booking orders compared to last year, even though the value of purchases might be smaller,” he added.</p>.<p><strong>What happened?</strong></p>.<p>The steep surge is attributed to multiple reasons. Geopolitical uncertainty owing to trade tensions between the US and China, weakening dollar rate and other central banks across the world increasing their gold reserves are some of the main factors, experts say. Gold breached the Rs 1 lakh mark (for 10 grams) earlier in the week. On Thursday, 10 grams of 24k gold was valued at Rs 95,760 in Bengaluru.</p>
<p>The Bengaluru market is showing mixed reactions to the unprecedented surge in gold prices. Pawn brokers, jewellery shops and investment advisers report that some are buying gold, while others are selling. Some are holding on to it anticipating a further increase in rates.</p>.<p>“Rising gold prices have led to increased investor interest and activity in bullion and online derivatives trading,” says Bharat Jain, assistant vice president at an investment firm. He adds that he has seen selling by ‘early investors’ — individuals who invested in gold over a year ago. “People who bought gold at Rs 55,000 last year are seeing about 100 per cent gains, and those who bought it three to four years ago will get three times their investment,” he states. From his clients, he has largely seen “profit booking and diversion to other assets”.</p>.<p>Gold Exchange Traded Funds (ETFs) are gaining more traction, he notes. In November 2015, the government introduced Sovereign Gold Bonds at Rs 2,685 per gram. “Those who possess those bonds are sitting with handsome profits now. It’s prudent to allocate part of one’s portfolio for gold to optimise risk and returns,” he points out.</p>.DH Deciphers | What is behind yellow metal's economic sheen?.<p>Vinod Hayagriv, director of a precious jewellery brand, notes that customers are waiting for prices to increase further before they decide to sell gold for profit or exchange gold. Many more wish to buy now as they believe rates are unlikely to come down anytime. “None of our customers are selling. I have not seen any encashment but the wealthier investors are exchanging gold for diamonds,” he shares.</p>.<p>This reinforces the faith in the investment value of the precious metal, Hayagriv believes. However, there has been a small decrease in quantity of gold jewellery sales: “In the past 10-15 days, sales have come down by 5-10 per cent,” he reveals.</p>.<p><strong>Topping-up loan</strong> </p>.<p>A Halasuru-based pawnshop has seen more people pledge gold after the pandemic, with a 40 per cent hike in customers over the past year. “Since loan-to-value (LTV) has increased, people are pledging gold for higher amounts. Currently, we lend around Rs 6,500/gm, but if prices keep rising, we might go up to Rs 7,000/gm,” said Sanjay Kumar Jain, proprietor. The latest trend he has observed is that of customers topping up loans by borrowing more on already pledged gold.</p>.<p>A Vasanth Nagar-based finance and pawnshop has observed a 30% hike in customers since April 2024. Abhay Kumar, proprietor, said that a liquidity crunch in the market has led to more people pledging gold recently. “The number of customers will keep rising as the gold rate increases,” he added.</p>.<p><strong>Other side</strong></p>.<p>On the other hand, a representative at a pawnshop in Nagawara says they haven’t seen enough customers since August. “Since the gold rates started increasing, people have not been pawning gold and jewellery. Why would they when they can sell it for a higher price now and buy it cheaper later, when the rates drop?” he said.</p>.<p>At a jewellery showroom in Commercial Street, around 3% of customers rushed to sell their gold in early April “when there were rumours of prices coming down”, said director Kishan Surana. “However, now as gold rates are rising, people are hopeful it will hike further and are not selling. Also, with Akshaya Tritiya around the corner (on April 30), customers have pre-booked orders and are purchasing gold,” he added.</p>.<p>T A Sharavana, president of the Karnataka Jewellery Association, said he “hasn’t seen a dip in gold sales and customers are not rushing to sell despite the current hike”. “In fact, for Akshaya Tritiya, we have seen a 25% increase in pre-booking orders compared to last year, even though the value of purchases might be smaller,” he added.</p>.<p><strong>What happened?</strong></p>.<p>The steep surge is attributed to multiple reasons. Geopolitical uncertainty owing to trade tensions between the US and China, weakening dollar rate and other central banks across the world increasing their gold reserves are some of the main factors, experts say. Gold breached the Rs 1 lakh mark (for 10 grams) earlier in the week. On Thursday, 10 grams of 24k gold was valued at Rs 95,760 in Bengaluru.</p>