Mumbai: Gold of 24 carat purity (999) crossed the Rs 50000 per 10 gm mark for the first time on Wednesday, tracking overseas bullion, which hit an 8-year high of $ 1779 an ounce on increased worries of the Covid fallout on the global economic recovery and a weaker rupee.

The PM rate for 999 purity, including 3% GST, was Rs 50,032, according to trade body India Bullion & Jewellers Association (IBJA), whose rates are used by RBI to price sovereign gold bonds.

The high rates are acting as a deterrent for fresh purchases but leading to increased demand for loans against jewellery from NBFCs.

“We have seen a good uptick in gold loans last month as borrowers are getting more money by pledging lesser gold, thanks to the rising prices,” said George Alexander Muthoot, MD, Muthoot Finance.

Most of the borrowers are from MSME businesses, including owners, who want to activate their businesses post the lockdown, added Muthoot.

However, fresh purchases of jewellery are lower, depending on the regions. In places like Karnataka, Kerala, Telangana and Andhra, sales have reached 50% of the same period last year for Malabar Gold, its head -corporate, media and PR, KP Narayanan, told ET even as stores in Chennai and Mumbai remained shut.

Zaveri Bazaar, India’s hub for gold jewellery, is seeing “negligible” customer footfalls since the lockdown was relaxed on June 8, said Haresh Kewalramani, IBJA Maharashtra president.

IBJA national secretary Surendra Mehta expects demand for jewellery to pick up over the next few months as the Covid menace “ abates. “

India’s net Bullion imports contracted 56% year on year to 78.4 tonnes in the March quarter this year as prices rose by almost a fifth, World Gold Council (WGC) data showed. However, scrap supply, or sale of gold for cash, rose 16% Y-o-Y to 18.5 tonnes over the same period.

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