Scrap arrivals surge as gold crosses Rs 50,000-mark to 18-month high
MUMBAI,MARCH 19: Households in need of cash are making the most of the recent rise in gold prices to 18-month highs. Pinched by rising retail prices, they are selling gold ornaments outright across the country’s bullion and jewellery markets, said leading industry sources.
“Taking advantage of the rising prices, customers are selling old jewellery across our outlets. Some are in need of liquidity and others simply want to book profit with the price jumping over Rs 50,000 (per 10 gm) in recent times. So much so they are bearing the loss of 3 per cent GST,” said Suvankar Sen, CEO, Senco Gold & Diamonds, which runs 125 stores across 14 states.
When a resident individual buys gold items, she pays a 3 per cent GST, in addition to 10.75 per cent import duty. However, since she is an unregistered dealer, she has to forfeit the GST while selling gold jewellery.
Debajit Saha, lead analyst at Refinitiv Metals Team, estimates scrap arrivals in the March quarter to be 65-70 per cent higher than the 12-tonne arrival in the year ago quarter. “These are outright sales by households to benefit from higher prices,” Saha told The New Indian Express.
The India Bullion and Jewellers Association’s (IBJA) PM rate of 99.5 per cent purity gold at Rs 51358 per 10 gm (ex GST) on Thursday was around 4 per cent below its March 7 high of Rs 53380. However, this compares with Rs 48000-49000 just before Russia’s invasion of Ukraine on February 24.
Gold hit a record PM rate high of Rs 55901 on August 7, 2020, months after the Pandemic surfaced. “Above Rs 50,000, many customers facing hardships amid rising inflation have been selling old jewellery,” said Haresh Kewalramani, Maharshtra president of IBJA, whose rates are used to price sovereign gold bonds.
He added the recent volatility in gold prices was due to factors like rising inflation in the US and more recently the war in Ukraine, rather than drop in Indian demand. India’s retail price inflation rose to 6.07 per cent in February, above the RBI’s medium term inflation target of 4 per cent plus or minus 2 per cent.
Resident individual
When a resident individual buys gold items, she pays a 3% GST, in addition to 10.75 per cent import duty. But since she is an unregistered dealer, she has to forfeit the GST while selling gold jewellery.
-INE
