Effect of government’s decision on gold… As soon as it became cheaper, sales increased rapidly, jewellers are doing very well

Gold prices have seen tremendous fluctuations in the last two months. In the first budget of Modi 3.0, on July 23, Finance Minister Nirmala Sitharaman announced a reduction in custom duty on gold and silver, after which gold suddenly became cheaper and gold sales in the country increased sharply. According to the latest report of Crisil, the revenue of jewelers may increase by 22 to 25 percent from gold sales in the current financial year.

Revenue increased so much due to reduction in custom duty
Crisil has projected a 22-25% jump in jewelers’ revenue, while earlier this forecast was 17-19% for the current financial year 2024-25. This means that after the reduction in gold rate after the government’s decision, it has been revised and increased by 500-600 basis points. Let us tell you here that this jump has come after the reduction in import duty by about 900 basis points in Gold-Silver Custom Duty in the Union Budget (Budget 2024). It is worth noting that earlier there was a custom duty of 15% on gold and silver, which has been reduced to 6%.

Gold slipped a lot after the budget
There was a sudden drop in the gold price after the budget and on the day of the budget itself it became cheaper by Rs 4,000 per 10 grams. After this, there was a decline in the gold price for several days and it reached around Rs 67,000 per 10 grams. Earlier its price remained above Rs 74,000 per 10 grams. However, in the month of August, the price of gold rose again and it is still selling cheaper than its all-time high.

Sales rise as prices fall
Crisil’s report says that this huge cut in custom duty has been done at a good time for the jewelers industry, because gold retailers are busy preparing for the wedding and festive season. Due to the reduction in the price of gold, retailers can increase their stock by up to 5 percent. The report also predicts that even though gold is available cheap right now, there are signs of increase in it, due to which jewelers can see a jump in profits during wedding and festive season.

This report has been prepared on the basis of analysis done with 58 jewelers, which contribute one-third to the revenue of this organized sector. It says that the sudden fall in gold prices may lead to inventory losses on existing stocks, but these losses are expected to be compensated by better demand in the future.

What is the price of gold right now?
On the last trading day, there was a fall in the price of gold on the Multi Commodity Exchange (MCX) and it slipped to Rs 71,538 per 10 grams. Talking about the rate in the domestic market, according to the IBJA website, 24 carat 10 grams gold is Rs 71,380, 22 carat is Rs 69,660 per 10 grams, 20 carat is Rs 63,530 per 10 grams and the rate of 18 carat gold is Rs 57,820 per 10 grams.