Gold prices fell sharply over the week, leaving markets and newsrooms in a flutter. But the sense of gloom hardly translated on to the streets, where crowds thronged jewellery stores to take advantage of low prices.
Industry insiders cautioned that further decreases seemed inevitable in the near future, and that gold purchases could book losses in coming days. Gold prices dropped a whopping 5% on Friday. This triggered a massive sell-off, with central banks of Cyprus and Japan looking to sell huge bullion. Analysts say prices are set to fall further with the possibility that other European economies would follow Cyprus.
“A majority of those who thronged the stores are likely to make a loss. They looked at the number and blindly rushed to stores. The price of gold may fall soon. If other Eurozone countries resort to this, then gold can shed up to 15% of its current price. A wiser approach would be to wait and watch,” said Krishnan (name changed), a trade insider of three decades. “But gold is risk averse in the long run. And it is the only investment now within reach of the middle class,” he added.
Major jewellers along Chennai’s golden stretch on Usman Road had a hectic day. “We have had huge crowds coming in. The falling prices combined with the sentiment surrounding the birth of the ‘Vijaya’ year has sent us scurrying,” said a jewellery store staffer.
“I don’t understand all this talk about economies. I am planning to wait and see if prices fall further,” said P B Seshadri, a retired professional, who returned home after realising that he couldn’t even set foot in the crowded jewellery stores.