Gold price’s slump to near a nine-month low is drawing jewelry shoppers in Asia to hunt for bargains.
After a year of demand being in the doldrums, retailers are buying more of the precious metal to cater to people like Seema B, a 35-year-old housewife who ventured to Mumbai’s Zaveri Bazaar to get new bangles after months of putting it off. “The prices have come down a bit and the general worries about the virus have also eased,” she said.
Seema joins others in India and Malaysia who are stocking up for weddings and investment. Retail investors in South Korea are amassing bullion while Chinese demand drove sales higher over the Lunar New Year. Demand for physical gold may stem the slide in prices that have been pummeled by rising bond yields and outflows from bullion-backed exchange-traded funds.
When financial investors aren’t buying, “the physical market becomes increasingly important in setting the floor for prices,” said Suki Cooper, a precious metals analyst at Standard Chartered Bank. “The gold price floor is starting to look well cushioned.”
Gold in the international market dropped 0.9 per cent to $1,729.60 an ounce on Monday. Earlier this month, it fell below $1,700 to the lowest since June, prompting more buying from consumers who were deterred by prices reaching a record of $2,075.47 in August.
Jewelers in India see the momentum lasting until the auspicious gold-buying day of Akshaya Tritiya in May. Kumar Jain, owner of U T. Zaveri store in Mumbai, expects his sales to almost double in the January-March period from a year earlier. “We have seen the best demand in the past month since the virus fear emerged in March last year, as customers came out to buy for weddings thinking prices will go up further,” he said.