Hyderabad: Customer hold off on buying gold at 6-year high

Hyderabad: Gold prices have soared to a six-year high but the metal has lost some of its sheen as customers are put off by the high price. The market is so dull that the big shops get maybe a customer a day and the small ones are on the verge of closure, unable to manage the overheads with the low demand.

On Wednesday, gold was at `35,440 for 10 grams. The high price combined with the lack of cash in people’s pockets is said to be the reason for the low demand.

Vikram Raju, a small jeweller in Basheerbagh said, “The effects of demonetisation are still being felt in the market as the ease of available cash that was there with people earlier is not there anymore. The other problem is rotation of money in terms of lending and credit, which has slipped badly as the money is not coming on time for any of the traders in any business. These two factors have hit the gold market badly and buying in the first half of 2019 was at an all time low.”

While there are no exact sales records available, most stores do not have customers for days together and are just about managing to stay afloat, hoping that the coming festival season will boost sales.

Ajay Aggarwal, a small jeweller in Panjagutta bemoans the fact that though gold prices have increased, “it has not brought the customer out of their homes to sell gold. On this street where there are 20 jewellery shops, only one or two have got customers who want to sell gold. So despite the high price, those enchasing on it are only one or two.”

Small scale jewellers are feeling the heat the most. Apart from not having customers their original business of offering schemes to customers for making gold ornaments has also been severely hit.

A jeweller who spoke on condition of anonymity, explained what this means.

“We earlier had chit fund schemes for customers who would pay an X amount for a month for their gold jewellery. The credit market in terms of other businesses didn’t default earlier hence the jewellers always got their money. Now the markets are different and we are facing the heat and these schemes have also been discontinued. The cash inflows are a major challenge. Even small work or rectification, breakage, mending and polishing, which earlier came in good numbers, hardly comes our way now.”

He says that the fact that there is so little work has taken away the artisans who were employed by the jewellers for this work.

“Hand-made jewellery has now been completely replaced by machines and most of it is imported from South East Asian countries.”  

The artisans only do odd jobs and their numbers have dwindled as there is not enough work for them. In the last few years, these workers have left the trade and opted for other work where employment prospects are brighter.