Kolkata: The bull run in gold has surprised almost everyone. It has been rising and rising, drawing on the strength of the air of constant uncertainty from military conflicts in West Asia and Ukraine, from the constant hunger of the metal of central banks of major economies around the world, festive demand in India and downward movement of the dollar against a few currencies.
Different factors are playing out in different markets at home and abroad but the end result is always almost the same — a rising demand from investors, both in form of physical metal as well as demat instruments such ax exchange traded funds. Now in the run-up to Diwali and Dhanteras, the investment appetite for gold has been so high that Tanishq, one of the biggest jewelers in the country, and an arm of the formidable Tata brand, is apprehending that it might run out of gold coins.
The price of 24 carat gold has now moved close to the unimaginable level of Rs 1.3 lakh per 10 gms and there is no idea among experts as to when the metal will enter the correction phase. By the way, Dhanteras which is this weekend represents the peak of demand for gold since a large number of Indians think it to be auspicious to buy gold on this day.
Running out of coins
Coins are purchased mainly because of their investment value. In an interview on NDTV Profit, Ajoy Chawla, the CEO of Tanishq has said that the company might run out of gold coins, considering the rush even at this price level. “We’re seeing a run on gold, especially on coins and bars — maybe because of investment or FOMO. People are thinking gold prices will go up further… There is a bullion shortage in the country. We have planned for it adequately, but I won’t be surprised if we run out of coins. There is a worry among customers that there may be a shortage of gold,” he said.
Many have turned buyers
“Volume growth has started coming in after the start of the festive season. Until Navratra, we saw a lot of customers stay away, and therefore, volume growth was not visible… But now that people have realised that the price of gold is here to stay and is going up, all those fence-sitters have started coming back. The sentiment is clearly back,” Chawla added.
The real point seems to be a lot of people were waiting in the wings for a correction in the prices. They now seem to be convinced that it is not going to happen quickly, or even if it happens, it will be temporary, and this understanding has prompted them to enter the market. Silver, too, is in great demand from investors and the white metal is also wtinessing a relentless bull run.
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