This Diwali, higher the gold more the buyers

Gold dealers report stock market syndrome among consumers - buying when the price is high

Retail gold outlets are facing a paradoxical situation this festive season with gold prices hovering around $1360 per ounce but demand for the yellow metal at a high although customers are expected to go for lighter alternatives in gold coins this Diwali.

With the Indian festival of lights Diwali set to be preceded by Danteras on Wednesday – when Hindus buy gold as an auspicious buy for the year ahead – gold retailers are stocking on Laxmi coins weighing less than one gramme rather than the heavier versions.

But experts say this is akin to the stock market syndrome when people buy when prices scale up.

Jewellers who spoke to Emirates 24|7 feared a shortage of these small gold coins since demand for the lighter version is expected to very high this season since gold bullion has been hovering at historic highs.

Most jewellers have placed additional orders for one gramme Laxmi coins to meet the anticipated demand for the lighter variant, while demand for gold and diamond ornaments are also expected to be high.

Sources at Al Haseena Jewellery confirmed the shortage of gold bars and coins as well. “We expect prices of gold coins to go up during this Diwali as we are short on stocks,” the source said.

Retail gold outlets are expected to open at 7:30am on Wednesday to facilitate early purchase of gold coins on the Danteras day.

Most jewelers in Dubai have been taking advance bookings for gold coins to avoid last-minute rush, as witnessed during Diwali 2009.

Gold sales rocket in this season, as World Gold Council estimates show a 40 per cent rise in demand in India, the world’s biggest gold consumer.

Sajith Kumar PK, CEO JRG International Brokerage DMCC said customers have been ordering for gold coins of one milligramme to meet the festive requirement without getting pinched by high gold prices. He said Diwali has had an impact on the rise of gold prices as demand shoots up during this season when Hindus buy gold irrespective of the price.

Changing preferences see customers buying gold jewellery instead of gold coins alone. Customers who shied away from buying gold above $1,000 are now ready to pay more, he said.

Michael Joshi, Marketing Manager of Malabar Gold said his outlets have been accepting advance bookings for coins since October 25 for Danteras purchases. Since buying of the yellow metal is also linked to auspicious time of the day, he expects massive rush during certain hours.

To satisfy all customers, unlike last year when many had to return with the outlets running out of stock, Josh said all 10 Malabar Gold outlets are well stocked this season. While the smaller ones are in demand elsewhere, Joshi said the 8-gramme Laxmi coins are in big demand, especially from expatriates who plan to gift them to their loved ones.

Several jewelers are running special campaigns with offers of free gold coins with purchases of gold or diamond ornaments.
 

 

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