Chennai ban on sale of gold bars, gold coins likely from next week

C Shivakumar

Chennai:

Chennaites could no longer buy gold bars or gold coins from the jewelry shops as jewellery associations in the city are likely to impose ban on the sale of such gold items, according to city gold merchants and jewelers.

Madras Jewellers and Diamond merchants Association president Jayantilal Challani told Express on Monday that the ban is likely to be implemented from next week in to stop import of gold from abroad and to strengthen the Indian rupee.

Interestingly, the move comes in the wake of gold prices spiralling since last one week.  This comes as imports declined by 80 per cent.

“A strong rupee will bring down the prices of gold,” said Challani. He is unperturbed by the rise of gold prices and said India is top importer of gold globally. Interestingly, his view has been echoed by director of NAC jewellery Ananda Ramanujam.

Ramanujam, who is a member of the the Gem and Jewellery Federation of India, said the federation will be imposing a ban on the sale of gold bars and coins in city next week.

“This has been already implemented in few places in north. We will soon be implementing it in south so that the rupee can be strengthened,” he said. He also said the rise in gold prices is temporary and it will fall once the rupee strengthens.

 “We are hoping the prices will come down once the rupee strengthens against the dollar,” he says.

Interestingly, the rise in global gold prices come in the wake of gold imports declining by 81 per cent. This also comes in the wake of Reserve Bank of India imposing curbs on consignment imports in May. The RBI has asked banks to no longer provide loans against gold jewellery to discourage gold buying as the government seeks to reduce a record current account deficit.

“The fall in gold imports is mostly due to traders keeping away from investing in gold due to government raising import duty and stopping consignment imports,” says Sarvan Raj, senior manager sales Kirtilals .

Although, gold imports would have been hit but that did not deter jewelers from buying gold. Many noted jewellers are coming up with offers to buy old gold jewels at the present rate with Rs 100 extra.

“This is a temporary phase, the gold prices will come down,” says  Raj. “We expect the gold prices to fall to Rs 2,200 to Rs 2,400 level. It may pick up by Diwali and consolidate after December-January,” he predicted.

India Ratings director Deep N Mukerjee told Express that the fall in global gold prices was temporary and the rise will continue. “Till there is global uncertainty, the prices of gold will continue to rise,” he said.

Interestingly, the rise or fall in gold has not affected the bigger players as consumers are investing in silver and diamonds. “Now consumers are looking at an alternative medium,” says Raj. "The sales of silver and diamonds is picking up as consumers are now buying silver ornaments and diamonds," he added.