Gold may have rallied high, but Indians unwilling to profit from it

KOLKATA: The rising price of gold since the beginning of 2016 has not enthused Indians to liquidate their household gold to create liquidity. Indians have reduced gold offerings to temples as well.

Gold has appreciated 25% from the beginning of this year on the back of geopolitical tensions, Britain’s decision to leave the European Union and the growing expectations that interest rates, which are arguably the primary counterweight to gold, are set to stay lower for longer and could even fall further.

“Despite prices surging ahead and a liquidity crisis being reported, we have not seen Indians selling household gold. Last year, when it touched Rs 29,000, we had seen people offloading old gold. But this year, we are not seeing that trend though price is around Rs 31,500-31,800,” said Jitendra Jain of Mumbai-based scrap dealing firm Jugrag Kantilal.

The price rise has also affected India’s devotion quotient. Gold offerings to many temples have fallen in the recent months, said people associated with temple trusts. “Every day we are seeing a drop in gold offerings,” Sanjiv Patil, the chief executive of Mumbai’s Shree Siddhivinayak Ganapati Temple Trust, told ET.

“Even silver offerings have declined after silver prices moved up. In the last one month, the drop has been around 10-15% for both gold and silver.” Currently, the temple holds 171 kg of gold and 3,000 kg of silver. It has already deposited 54 kg of gold under the government’s Gold Monetisation Scheme (GMS) for 5-7-year tenure. “There will be two auctions of temple gold — one on August 20 and another after Diwali. Whatever gold will be left will be deposited in GMS,” Patil said.

At the Tirupati Balaji Temple gold offerings are steady. The spokesperson of the Tirumala Tirupati Devasthanam said: “We have not seen a decline in gold offering. It is steady as of now.”