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L.N. Revathy

COIMBATORE, June 3

DEMAND for gold, which is sensitive to price volatility, has been affected in view of the yellow metal's soaring prices. This is expected to continue until consumers and the trade feel that the price has settled down.

While the trade is unable to say the exact fall in volume of gold trades, jewellers concede that the ornament exchange market is presently more active than new gold purchase.

Traders say this has led to demand for recycled gold. Most of the local demand is currently being met by recycled gold. The price conscious buyers are also taking advantage of the high prices to off-load their old jewellery.

Meanwhile, the trade, in a bid to woo customers at such times, promise easy exchange schemes apart from waiver of wastage and making charges.

According to trade circles, the country's gold imports took a beating as world prices soared due to an escalation in tension between India and Pakistan. The imports have nose-dived from around 5,000 bars a day to 1,000-1,500 gold bars (of 116.64 grams each) a day currently.

Traders are unable to accept the current price level.

Domestic prices are derived from global quotes as the country imports about 70 per cent of its annual demand of some 850 tonnes.

Gold has been on a winning streak, gaining about 17 per cent since the start of the year .

Buying is expected to resume if prices stabilise at any level for more than a week, trade sources said. But the demand, especially in rural India is not likely to look up as marriage buying is almost over and farmers are diverting their funds to buy seeds and fertiliser for planting crops.

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