The soaring price of gold may take four or five weeks to stabilise. The price of the yellow metal, which began to ease a few days ago, has started climbing up for the past three days.
On Friday, one gram of 22-carat gold was priced at ₹3,809, which is ₹1 higher than the previous day. There has been a 27% rise in gold prices this year compared to last January, noted jewellers in the city. On January 8, the cost of one gram of 22-carat gold had touched ₹3,897.
Normally, the price of gold goes up by 3 % to 4% around Pongal time in Chennai. This year, the threat of an US-Iran war led to the strengthening of the dollar value and developments in the global market were some of the key reasons that triggered an abnormal rise in the gold price, said S. Santhakumar, vice-president, Indian Bullion and Jewellers Association. Moreover, gold has attracted attention in global market as a better investment option compared to mutual funds and real estate. This has led to further hike in the price. It may take a few weeks for the gold cost to stabilise, he said. He recalled previous years when gold prices have dipped whenever a country sold its stock to sustain its economic status.
Jewellers noted that sales have already dipped by 25% in the past few months as people’s purchasing power has decreased.
The high import duty has also influenced the steep hike in prices. The All India Gem and Jewellery Domestic Council has sought a reduction in import duty on gold to save the labour-intensive business. Its chairman, N. Anantha Padmanabhan said the high import duty has led to the emergence of illegal channels to procure gold. Many of the labourers engaged in jewellery manufacturing have left the profession due to the growing challenges.
The council has also suggested that the PAN card limit must be increased from ₹2 lakh to ₹5 lakh for purchases. The option of buying jewellery in easy instalments should be allowed to help consumers, he said.
Welcoming the mandatory gold hallmarking initiative, jewellers said it would help the gem and jewellery industry to move towards the organised sector and improve the quality of gold.