Gold hits fresh all-time highs, dampens festive season demand

Hyderabad: Gold prices surged to all-time highs in the Indian market on Wednesday as international spot gold prices raced to a new high of $2684/Oz, leaving jewellers worried about lacklustre festive season sales this Diwali.
While 24K gold prices raced past the 78,000 per 10GM mark (including import duties but excluding GST) in local markets such as Delhi, in Hyderabad and Mumbai markets too, they hit their all-time highs of 77,820 and 77,880, respectively, according to HDFC Securities.
HDFC Securities Senior Commodities Analyst Saumil Gandhi attributed the latest surge in yellow metal prices to central bank demand expectations and a decline in US treasury yields.
However, Indian Bullion and Jewellers Association (IBJA) National Secretary Surendra Mehta said he could not figure out the rationale behind the latest rally. "China is not buying, the dollar index and bond yields are not in favour of gold, and not much escalation is expected in Middle East tensions till US elections are over," Mehta said.
All India Gems & Jewellery Domestic Council Director Avinash Gupta said apart from the stress in the US economy, tensions in West Asia too were spurring safe haven demand for gold.
However, the recent surge has dampened local buying sentiment that saw a robust revival after the 9% import duty cut in July this year. "The sector was able to maintain a better position than last year thanks to duty cuts, but ever since prices crossed 76,500, sales have been slow. The latest surge puts a question mark on this year's Diwali sales," Gupta said.
The move has already forced jewellery players to come up with extra sweeteners to lure buyers to showrooms. Ajoy Chawla, CEO of Titan Company's jewellery division, said the company had rolled out a special discount on gold prices for the first time over and above the discounts on making charges they usually offer during the festive season.