Gold price skyrockets, buyers cut down gold quantity

Hyderabad: Though the Union Budget released on Wednesday gave some relaxation over customs duty on few products and services, the import duty remains unchanged. Even as the city is witnessing wedding season, the rise in gold prices has dampened jewelers' enthusiasm. They said that the hike in gold prices will dip the buying capacity of customers.

Scores of weddings are expected to take place in the next two months, markets are abuzz as people are flocking to outlets to wrap up their shopping. But those planning to buy gold are thinking twice owing to the sharp rise in prices.

Gold traders who were expecting a reduction in import duty in the Union budget are left disheartened as no change was introduced. The import duty continues to remain at 15 percent. This year too, it was anticipated that the import duty on gold would be cut from. However, the government not only kept the duty intact, alarming both consumers as well as those in the jewelery trade. Traders said that buyers are cutting down on the volume of gold purchased for various occasions, especially weddings.

All India Gem and Jewellery Domestic Council said that the Jewelery Industry's concerns were not addressed in the Union Budget 2023-2024, even after giving several representations to the finance minister. "The reduction in Gold Custom Duty in this Budget was our big expectation, which has severely hampered the industry leading to encouragement in smuggling and grey market. We urge the government to curb the smuggling of gold," said Mohan Lal Jain, CoA, All India Gem and Jewelery Domestic Council.

Since the beginning of the year, the price of gold has been making its way up and on Thursday, the value of gold notched high in the Hyderabad market. The cost of 24-carat gold was Rs 58,470 and 22-carat gold Rs 53,600 per 10 grams on the back of a 15-20 per cent surge in the international rate over three months.

Owners of jewelery stores said that if there is further increase in the price, the number of gold buyers and the quantity they buy will reduce. People are worried about the increase in gold prices and questioning how they can buy gold for occasions such as marriages if the trend continues.

J Ashok, an owner of a jewelery store said, "Gold rates that are already hitting new highs may continue to rise as the import duty remains same. The price may touch Rs 60,000 mark per 10 grams in coming days," he added.

Due to continuous hikes in gold rates, traders were demanding a cut in import duty on the yellow metal. They believe that the cut in duty will not only push the sales but also help the government in putting a curb on smuggling.

Ghulam Hyder, another owner said, "There is barely any demand for jewelery. Although prices are high, as there is no substitute for gold for marriage, when purchasing, people are mostly exchanging used ornaments to cut down the total spend."

Gold and silver prices in India depend on several factors, including the value of the rupee against the dollar. Global demand also plays a key role in determining the trends observed in the rate of metals.