Gold sales tumble despite strike end as prices climb

Apr 11, 2012 |

Reuters

mumbai

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Daily sales of gold in India are down 80 per cent from a year ago so far this week from April 9 despite the end on Saturday of a 22-day strike when jewellers shut shop over taxes, as high prices are still hurting appetite.

Normally during this peak wedding and festival season, around 7 tonnes of gold would be sold every day to jewellers and stocks would be about 10-12 tonnes accumulated in the past 3-4 weeks.

"We have delivered pending orders, but there is no work today as gold prices have gone up," said Kumar Jain, vice-president of the Mumbai Jewellers Association. Jain also owns a retail shop in Zaveri Bazaar, India's biggest gold market.

Jewellers across India called off the strike on Saturday after assurances from Finance Minister Pranab Mukherjee that the government would consider scrapping plans for an excise duty on unbranded jewellery.

A final decision will not be known until May 7 when parliament is expected to consider the 2012/13 budget and any changes would be made public.

The duties -- which include doubling import taxes to four per cent -- could dent India's gold imports by a third to 655 tonnes in 2012, allowing China to overtake it as the biggest gold importer.

For demand to pick up, global prices will have to fall by about 9 percent, a trade body head said.

"A correction in gold to $1,500 (an ounce) could help physical players," said Prithviraj Kothari, president of the Bombay Bullion Association, India's biggest trade body.

Global gold prices rose about a percent to $1,655.16 an ounce on Tuesday as expectations that a sluggish employment market in the United States could spark a fresh round of quantitative easing, despite the influence of a firming dollar.

HDFC Bank quoted domestic prices for gold at Rs 28,405 per 10 grams on Tuesday, up 4 per cent from March 17, when the strike started.

India's wedding season is at its peak now, before the soaring temperatures of high summer and the monsoon, while Akshaya Tritiya, one of the biggest gold buying festivals, falls later this month.

Indian festivals often link gold to good fortune while weddings are traditionally moments to show off your wealth in the form of gold jewellery.

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