Gold loses sheen, but finds few takers

Prices fall after income tax officials raided jewellers who were selling gold at a premium post demonetisation.

Published: 27th November 2016 02:23 AM  |   Last Updated: 27th November 2016 02:23 AM   |  A+A-

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Express News Service

BENGALURU: Gold prices have taken a beating in the last 15 days but unlike other times, there are no takers. Soon after the Centre demonetised Rs 1,000 and Rs 500 notes, many jewellers were selling gold at higher prices by taking demonetised currency. This stopped after a few days when the Income Tax department raided such jewellers. Following this the prices came down.

Gold price was around Rs 31,010 per 10 grams (24 karat) and Rs 29,000 (22 karat) before the demonetisation move. Soon after Prime Minister Narendra Modi announced that Rs 500 and Rs 1,000 notes would be scrapped, prices touched Rs 32,500 (24 karat) and Rs 31,500 (22 karat). The prices shot up as many saw this as an opportunity to buy gold using old currency. However, just two to three days later, Income Tax department raided such jewellers and prices dropped.

On Saturday, gold price was Rs 29,500 and Rs 27,550 per 10 gram of 24 karat and 22 karat gold respectively. “In just 15 days, the price of gold reduced by Rs 3,000 for 10gm. If this continues, the price could even touch Rs 2,500 per gm,” said the owner of a jewellery shop in Malleswaram.
According to him, people who buy gold prefer to pay in cash. This may be a tactic to change black money to white. “Even now, some have approached with old currency notes. We don’t accept old notes as it might be problematic for us,” he said.

According to T A Saravana, president of Karnataka Jewellers’ Association and owner of Sai Gold Palace, Karnataka has 25,500 jewellers  and 8,500 are in Bengaluru. Almost 70 per cent of these businesses are hit. “There are lakhs working in this industry. If the price continuous to go down, we might have to lay off staff,” he said. He added that in a day, an average of Rs 20,000 crore is made from gold businesses in the state. A part of this was paid as VAT. “Since business is dull, we will not able to pay VAT, which means less fund flow to the government,” he added.

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