Gold vaults to Rs40,000 per 10 gram as cash hordes descent on jewellery shops

Gold emerged the top gainer from the government's decision to demonetise Rs1,000 and Rs500 notes pushing up the prices of the precious metal to levels of up to Rs40,000 per 10 gram in Mumbai and around Rs34,000 per 10 grams in Ahmedabad, say reports.

Reports quoting Mumbai Jewellers Association vice president Kumar Jain said gold prices have soared due to demand supply gap and that in some cased gold was sold at a higher premium.

Against the ruling price of Rs31,900 per 10 grams, in the market gold is reported to be sold at a premium of Rs10,000 per 10 grams, which takes the total price to over Rs40,000 per 10 grams.

Jewellery shops had a field day on Tuesday as some of these shops stayed open till 11 pm to cater to the rush of clients, Jewellers' Association of Ahmedabad, President Rohit Jhaveri said.

People formed a beeline at jewellery shops with their cash hordes after government's decision to scrap all Rs1,000 and Rs500 notes.

"People with unaccounted money to dispose rushed to purchase gold last night as soon as the news broke. Whatever registered gold was available with limited jewellery houses was sold last night within couple of hours," claimed president of Gems and Jewellery Trade Council of India (GJTCI), Shantibhai Patel.

"With the high demand the price peaked at Rs 34,000/10 gram last night. Buyers also included those who rushed to markets out of panic post the announcement," Patel added. 

While the actual turnover at jewellery shops across the country is yet to be estimated, some shopes in Mumbai are reported to have carried out business worth several croes in few hours to midnight of Tuesday, the day when Prime Minister Modi announced the decision.

Reports said business across the country went up to around 200 per cent on Tuesday night, meaning sales could have crossed 4-tonne mark against the normal day sales of around 2 tonnes of gold jewellery.

"Jewellery houses have stopped selling gold, saying that the bullion is no longer available in the market," he said.

"A few jewellery houses remained open till 11 pm last night, till police forced them to close. They generally down shutters by 9 o'clock, but rush of buyers forced them to open till late night," he said.

"Jewellery purchase remained brisk since last night especially as people who have to make purchases for marriage understand that the price of gold will only go up due to large-scale purchase after the currency demonetising decision," Jhaveri said.

However, all of these cannot be marriage purchases and many of the buyers were those who had to dispose of the demonetised currency, which they could not have done through banks.

"People who have no black money do not need to panic as the currency continues to remain in operation till the time banks accept them for conversion, that is December 30," Patel added.

Tuesday night announcement by Prime Minister Narendra Modi of the government's decision to demonetise Rs1,000 and Rs500 notes came as a rude shock for hoarders of black money.

The jewellery industry welcomed government's decision to scrap the Rs1,000 and Rs500 notes citing it as a bold move to curb tax evasion and improve compliance.