Dip in white gold prices hit yellow metal buying in region

NAGPUR: Gold has once again crossed ₹60,000 a tola (per 10 grams) mark, but jewellers say it is the poor rates for cotton — also known as the white gold — which has kept demand for yellow metal in the region down.
In markets like Vidarbha much of the demand comes from the rural areas. This year farmers are not left with much surplus income to buy gold after the harvest period. Last year cotton, which is the main cash crop of the region, fetched a price over ₹13,000 a quintal. This year the prices opened at ₹9,000.
In turn, the farmers did not sell the crop hoping for the prices to go up. Finally, as they have begun to sell, cotton is fetching a price between ₹7,800 to ₹8,000 a quintal, sources say. Even soyabean rates are down to around ₹5,000 a quintal. Farmers want it to be at ₹6,500 at least.
As farmers are left with little surplus cash, gold buying is down in rural areas. The demand has further slipped due to the high rates of gold too, says jewellers. However, farmers also say that these days only the big cultivators can afford buying gold. The small farmer only goes through a continuous cycle of pawning the gold to meet his expenses and then releasing it after the harvest.
Nitin Khandelwal, a wholesaler from Akola, said poor rates of both soyabean and cotton have affected the farmers’ sentiment, in turn bringing down gold buying. This was confirmed by Rajesh Thakker of Ditpi Jewellers, also a wholesaling firm in Akola. Thakker said that the retailers have reported a rather low demand which can be termed to be the worst in the recent past.
Vatsal Bangre, president of Maharashtra Swarnkar Sanstha (Gramin), said that farmers don’t have buying capacity for precious commodities like gold due to the crop situation. Even otherwise, high volatility has deterred the buyers in general, he said.
Farmers buy gold each year after the harvest, which is either sold or pawned to meet the sowing expenses of the next year. This year delayed sales of cotton and low rates have led to minimal fresh purchases of the yellow metal, explained farm activist Kishore Tiwari.
Vijay Jawandhia, a veteran farm activist, said that gold buying by farmers has also declined over the years. There was a time in the 1970s when a tola of gold and one quintal cotton were both priced at around ₹250. Now, the comparative rates are ₹60,000 and ₹8,000 respectively.