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Covid-19 bugs jewellers who’d got big orders

Analysts expect the price to rise further in the short term due to continuing the impact of the new coronavirus disease, or Covid-19, in the global markets.

, ET Bureau|
Last Updated: Feb 21, 2020, 09.29 AM IST
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Reuters
Gold-2---Reuters
“We expect gold prices to trade higher towards $1,645 in short term on account of coronavirus crisis,” said Tapan Patel, senior analyst at HDFC Securities. High gold price will also dent demand in the domestic market, trade insiders said.
The continuing spike in gold price has created an air of uncertainty among the jewellers who had bagged orders worth Rs 1,000 crore at the recently concluded India International Jewellery Show (IIJS) in Mumbai.

With gold prices climbing to a seven-year high on Wednesday mainly on concerns that the novel coronavirus outbreak will slow down global growth, the jewellers are not sure whether buyers — mainly jewellery retailers, both domestic and international — will take delivery of the contracted volume on time, industry insiders said. “Prices moved up after the show was over,” said Anantha Padmanabhan, chairman of All India Gem & Jewellery Domestic Council, a national trade federation that represents more than 300,000 businesses. “We are worried whether the buyers will at all purchase the contracted volume. If they do not take delivery, then our capital will get blocked.” More than 600 jewellers participated in IIJS held from February 13-16. Gold was trading at Rs 41,640 per 10 gm on Thursday.

Analysts expect the price to rise further in the short term due to continuing the impact of the new coronavirus disease, or Covid-19, in the global markets.

The yellow metal is considered a safe haven, hence its demand spike when the global investment sentiments are down.

Gold snip 2

Gold prices have rallied more than 3 per cent since the novel coronavirus outbreak in Wuhan, China was announced on January 20. Spot gold at Comex is trading near $1,610 per troy ounce, the highest levels since 2013. Warnings on earnings estimates from corporate giants like Apple Inc further boosted demand for gold.

“We expect gold prices to trade higher towards $1,645 in short term on account of coronavirus crisis,” said Tapan Patel, senior analyst at HDFC Securities. High gold price will also dent demand in the domestic market, trade insiders said.

Consumers buying for the ongoing wedding season will buy lesser quantity, said Surendra Mehta, national secretary at India Bullion & Jewellers Association, an apex body for all bullion and jewellery associations in the country. “Once the wedding season is over, demand will drop by 50 per cent,” he said. Patel of HDFC Securities said the China’ stimulus initiatives such as lowering of rates may help its economy to survive the crisis, but shutdown of its manufacturing activities and lower trade may impact global raw material supplies.

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