No silver lining to flat Dhanteras gold sales

NAGPUR: Even as gold touched Rs 32,075 a tola (10 grams) this Dhanteras, traders reported almost no growth in sales as compared to last year, blaming the weakening rupee for making the yellow metal dearer at home. Interestingly, there was no increase in demand for silver too.
The benchmark price of gold, quoted in dollars per ounce, has fallen from a high earlier in the year.However, when the rupee falls against the greenback, the price of gold, which is an imported commodity, becomes dearer.
All this has resulted in the yearly increase in gold prices from Dhanteras to Dhanteras coming down. As against an appreciation of 26% in 2011, the yearly appreciation on the festival in the current year stands at 15%. The rates stood at Rs 27,245 a tola on the festival last year and Rs 19,955 the year before.
Internationally, gold is currently priced at $1,731 an ounce, which translates to Rs 32,075 a tola. However, the yellow metal has fallen from a peak of $1,790 in October, when rates in India were around Rs 31,600, Rs 475 lower than current levels. This rise in Indian gold prices even as international prices are down is due to the dollar now being priced at Rs 54.68 a rupee as against Rs 52.73 in October.
Lower international prices mean that the demand globally is less, but the movement is due to a weaker rupee, said Nilesh Rathi of SMS Bhav, a bullion rate information agency.
"A weaker rupee also reflects the country's economic condition. If you see the gold rates from 1980s onwards, in terms of dollars, the prices have multiplied five times. But in India, it has been an eightfold rise in rupee terms," said Mansukhlal Soni of Satyam Jewellers at Sarafa Oli, Itwari. "If the rupee strengthens there have been times that the dollar has weakened internationally, which again makes gold rates go up," he added.
The rush at Sarafa Oli, the traditional hub for jewellery shops, was not significant despite this Dhanteras falling on Sunday. "The turnover is higher than a normal day, but nothing worth mentioning," said Rajkumar Gupta of Sarafa Merchants Association.
The volumes have been higher on Dhanteras but the growth is flat as compared to the previous festival said most jewellers. Unlike earlier years, the demand for silver has also come down, added Pradeep Kothari of M/s Karan Kothari Jewellers.
Consumers too did not appear to be much enthusiastic although many bought gold just to keep up the tradition. Naresh Jhakotia, a chartered accountant, said that his family did buy gold on the occasion but the quantity did not increase as compared to last year.