Pre-Dhanteras high prices, cash crunch take sheen off gold this season

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Gold is likely to lose its sheen this 'Dhanteras' due to liquidity crunch amidst rising prices and other investment options, say market experts and the industry. If the sluggish sentiment prevails this will be the second consecutive year of poor sales.

In 2017, the Dhanteras season saw sales plunging more than 30 per cent over the 2016 levels when sales were reasonably good as the note ban was announced post-Diwali. But last year was one of the worst for the industry in recent years as it was after the note ban and GST implementation coupled with tighter KYC norms for high-value purchases.

"I am not expecting good business this 'Dhanteras' as the consumer sentiment is not so good due to lack of liquidity in the market.

"I am expectingsales to decline by 5-10 per cent from last year or at best to be at par," All India Gem & Jewellery Domestic Council (GJC) chairman Nitin Khandelwal told PTI. Bullion prices have been heading north for quite some time now, which is also deterring people to buy gold, he added.

Dhanteras is considered to be an auspicious day for buying gold, silver and other valuables and is largely celebrated in northern and western parts of India.

Last year, gold prices were ruling a little over Rs 30,000 per 10 gram during Dhanteras. Domestic gold prices closed at Rs 32,550 per 10 grams Saturday, while globally it closed at USD 1,233.80 an ounce in New York on Friday.

Reiterating Khandelwal's view, former GJC chairman Manish Jain said the business was badly impacted during the Dussehra festival, which has set the tone for Dhanteras and Diwali, generally considered auspicious for buying the yellow metal.

"We are hoping the industry at best matches salesat the last year levels. However, looking at the current sentiments we expect it may even be slightly lower than that of last year," he added.

He said factors like better investment options like mutual funds are also diverting people from purchasing gold during the current festival season.
However, he said, the organised players are expected to do better than last year, and that it is the unorganised sector, which still comprises 70 per cent of the industry, that is feeling the pinch as consumers are grappling with liquidity issues.

"The industry is slowly shifting towards organised after the implementation of goods and services tax. But it will take time for the industry to become fully organised.

"In the meantime the business of the overall industry will be negatively impacted," he added. Also, he said, the industry is yet to fully recover
from the note-ban shock as almost three-fourths of the industry is in the unorganised sector.

Meanwhile, Titans associate vice-president for marketing at its Jewellery Division Deepika Sabharwal Tewari said note-ban and GST have had significant impacts on all industries especially the organised retail jewellery sector.

In the last one year, the market has not only stabilised but has also seen steady growth, she said.

"We at Tanishq have seen great traction during seasons like Akshaya Tritiya, Gudi Padwa, Teej, Varamahalakshmi and Durga Puja and we are expecting this to continue during the Diwali season as well.

"We are expecting demand to be favourable and meet our expectations from this festive season," she added.

Echoing similar views, Kalyan Jewellers chairman and managing director T S Kalyanaraman said, "Overall we expect 5-7 per cent volume growth during this Dhanteras compared to last year as consumers have understood that buying from organised players get them best resale value compared to buying from unorganised ones."

The industry, he said, is also moving towards organised from unorganised after the GST, gaining more consumer confidence. To attract consumers and to increase footfalls during the festival, the company is also focused on campaigns and offers, he added.

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