Date:02/01/2009 URL: http://www.thehindu.com/2009/01/02/stories/2009010250870200.htm

Tamil Nadu - Chennai

Drop in gold price does not boost New Year sales

Staff Reporter

Recession contributed to the decrease in the sales

— Photo: V. Ganesan

TO BUY OR NOT TO BUY?: The fluctuation in gold prices in 2008 had buyers postponing their purchase. Even around New Year, the sales have been rather poor despite special offers, say store owners.

CHENNAI: The cost of a sovereign of 22-carat-gold, which was high for the past few days, dropped by Rs.30 per gram on Wednesday. However, jewellers in the city said that the drop in price in the last two days has not boosted the New Year sales.

Though several jewellers offered gold ornaments at a lesser price per gram and did not charge wastage and stone charges, most customers refrained from purchasing the yellow metal. The price of one gram of the precious metal, which was Rs.1,253 on Tuesday, dropped to Rs.1,223 on Wednesday.

Jewellers across the city noted that the price of a sovereign of gold in the city crossed the Rs.10,000 mark for the third time this year on Monday. It was priced at Rs.1,256 a gram on Monday. The surge in the gold price earlier this week affected the New Year sales.

Several jewellery showrooms reported a drop in the sale of gold ornaments during Deepavali this year owing to the spiralling costs of the precious metal.

The cost of gold touched an all-time high of Rs.1,284 per gram in October. In March, one gram of gold was priced at Rs.1,255 and silver price touched an all-time high of Rs.29.65 per gram.

Managing Director of Lalitha Jewellery M. Kiran Kumar said that the sales were hit by nearly 50 per cent despite the festive offers due to the increase in gold prices for the past four days. The gold chit scheme, which is a popular saving scheme among the customers, has also been hit due to the surge in the cost. Economic recession across the world also contributed to the decrease in the sales. However, the price of silver remained at Rs.20 on Wednesday. Jewellers said that the sales of silver articles were normal due to the stable price for the past few days, he said. Chairman of Gold Club of Chennai N. Anantha Padmanabhan said that the value of the rupee depreciated against the dollar by 20 per cent.

This led to surge in the gold price in the international market. Moreover, investors have turned their attention towards gold due to the volatile stock market. The gold price may come down in January with the U.S. stock market expected to improve, he said.