The soaring gold price has hit Colaba Causeway, the high street of wealthy southern Mumbai.
Rajendra Gurjar’s family-owned gold shop is usually packed with people ahead of May 16 when the country’s Hindus celebrate the Akshaya Tritiya festival by buying gold. But today as the price of bullion hit fresh highs the store was deserted by even its most faithful customers.
Sitting behind his till with his arms crossed and with an unusually calm look on his face, Mr Gurjar said:
The price makes a big difference, if the money in your pocket shrinks you are going to buy less or no gold….We won’t see many people coming to the shop while prices stay at these levels and I fear it will continue to be this way for a while.
The gold futures for June delivery on India’s Multi Commodity Exchange were trading 1.48 per cent higher at Rs18,163 (about $400) per 10 grammes. Globally, gold reached a new peak of $1,243.90 an ounce in early European trade, after overtaking its December high of $1,226.10.
India has in the past been the world’s largest consumer of gold – although these days it has been battling with China for the top spot. But at the same time Indians are among the most price-sensitive buyers in the globe.
Gurjar’s shop was brimming with customers when the FT last visited a few months ago during Diwali, the Hindu festival of lights, which is also a big gold-buying occasion. But that was then, and this is now: when prices go up, demand drops dramatically.
Two other shops the FT visited today were experiencing the same dearth of business as Gurjar.
Kirti Jain, the owner of Zaveri Silver and Gold House, was playing videogames on his mobile today rather than selling the yellow metal to clients.
“We are facing big, big problems,” he said as he put down his handset. “We have seen a 30 to 40 per cent drop in customers in the last couple of months, as prices have been going up day by day.”
Abishek Pherwani, a manager at Sunderdas & Sons Jewellers, said that many people were trading their old gold to buy new pieces, “In general my clients are buying smaller pieces…but our sales have been hit badly.”
Prithviraj Kothari, director of the Mumbai-based RiddiSiddhi Bullions, told Bloomberg that he expects gold demand in India to drop 50 per cent during the upcoming Akshaya Tritiya festival.
Silver is likely to be the commodity to attract Indian consumers ahead of the upcoming festival, Pinakin Vyas, assistant vice-president with IndusInd Bank, told Reuters:
The investment appetite is good for silver along with industrial demand…We are hearing of good demand for Akshaya Tritiya for silver in the market.
What is sure is that there is now little hope of a gold rush before the festival. The goldsmiths all suggest only the gods can turn things around.