Surge In Gold Prices Short-Lived, Say Jewellers
Gold prices shot up to Rs 55,000/10 grams in the black market on November 8
In times of trouble, people often turn to ‘safe haven’ gold. That’s what Indians did on November 8, but for very different reasons. On hearing that the government had declared all Rs 500 and Rs 1,000 notes illegal, citizens rushed to Mumbai’s bullion market, Zaveri Bazaar, to try and salvage their black money by buying the precious metal.
Many jewelers often transact in cash and hence expect the government would not be alarmed by large cash deposits in their banks. Taking advantage of the frenzy on Tuesday night they sold the yellow metal at a premium.
In some stores the price increased a mere Rs 1,000 to Rs 32,000 per 10 grams, said Kumar Jain the owner of Umedmal Tilokchand Zaveri, Mumbai and the vice-president of the Mumbai Jewellers Association.
In others it shot to Rs 55,000 per 10 grams of gold, according to many jewelers who did not want to be named. Several shops remained open till midnight on November 8 as consumers kept pouring in.
2 Days Later
But by Friday the rush had ebbed, with most stores wearing a deserted look, and a sharp dip in demand. With currency notes running out of supply, jewelers fear that weekly limits imposed on cash withdrawals could mean that customers will now choose to spent the cash on staples, rather than on gold, leaving them with little hope of a rise in demand in the near future.