Gold purchase by jewellers falls 25% in a week amid rise in Covid cases

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Gold purchase by jewellers falls 25% in a week amid rise in Covid cases&nbsp

New Delhi: Amid a spike in the number of fresh covid cases and authorities bring back some of the restrictions, gold purchase by jewellers has dropped by 25% in the past week. This comes in anticipation of the third wave and many weddings being postponed, ET reported.

According to industry estimates, lower local bullion buying is likely to bring down the import of gold in January to 55-60 tonnes from 86 tonnes in December. But, prices are expected to move up amid increasing Covid cases globally, as the yellow metal is seen as a safer bet in times of uncertainty.

India’s wedding season, which begins on January 15 and continues right up to July, is typically a strong period for jewellery sales. However, with several states announcing night and weekend curfews, and restricting the number of guests at events, jewellers fear a repeat of the last two years when many marriages were postponed amid the pandemic waves.

Ashish Pethe, chairman of the All India Gem & Jewellery Domestic Council, said: “In the first two waves of Covid, the gold market was impacted badly and the jewellers suffered with their inventory in hand. But gradually, people have started living with it. Jewellers, too, have become cautious and they have reduced buying of the bullion as Covid cases are climbing up.”

“There is a dip in bullion buying by almost 25% since the cases started increasing over the last one week,” he told ET.

“Also, customer footfall at Zaveri Bazar, the largest gold market in the country, has reduced by 20-25%, ” he added.

While demand for gold may remain muted for a while till the Covid situation comes under control, prices are expected to move up in the short term.

Gold is expected to hold $1770 per troy ounce and silver is expected to hold $21.84 per troy ounce levels on a closing basis. The yellow metal has support at $1778-1770 per troy ounce and resistance at $1800-1814 per troy ounce while silver has support at $22.00-21.84 per troy ounce and resistance at $22.50-22.70 per troy ounce.

Gold and silver crashed on Thursday after hawkish Fed statements and record gains in the US bond yields. Both the precious metals settled on a weaker note in the international markets.

Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities, said that COMEX gold trades mixed near $1790/oz after a sharp 2% decline yesterday. Gold has stalled after the sharp sell-off triggered by FOMC minutes as market focus shifts to non-farm payrolls report. Support from virus concerns and geopolitical risks is countered by Fed’s aggressive monetary tightening stance and weaker investor interest. Gold has corrected sharply from recent highs but remains within the recent range of $1780-1830. The general bias remains weak unless we see a surprise number from US jobs report.

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