INDIAN firms look set to cut back on giving silver and Gold Bullion items as corporate gifts this Diwali, substituting them for luxury goods such as iPads, smart phones and sandwich makers, the Economic Times of India reports.
"Corporate gifting of gold and silver coins during this Diwali is on decline," says Bachhraj Bamalwa, chairman of the All India Gems and Jewellery Trade Federation.
"There is some reluctance among jewelers to create an inventory for the festive and wedding season."
The falling value of the Rupee on international currency markets has contributed to domestic Gold Bullion prices hitting new record highs this year, despite the fact the Dollar Gold prices remain significantly below their all-time peak. Jewelers report that this has dented demand for items made from Gold Bullion.
"There are no orders," adds Bharat Zaveri, managing director of Zaveri & Co. in Ahmedabad.
"We feel companies will go for other gift items as gold and Silver Prices remain firm."
Zaveri's comments are supported by those of businessmen who in the past of chosen to give silver and Gold Bullion to their associates.
"We have stopped giving gold and silver coins as corporate gifts during Diwali and are now giving consumer durables and iPads to clients," says Sanjay Bansal, chairman of tea producer Ambootia Group.
Record bullion prices have also boosted the recycling of gold, with people swapping old jewelry for newer fashions, the Wall Street Journal reports.
Prithviraj Kothari, president of the Bombay Bullion Association, estimates that around 40% of Gold Bullion sales are based on exchanges of old pieces of jewelry, roughly twice the proportion as last year.
This, Kothari suggests, could lead Indian gold demand between now and the end of the year to be half what it was in the same period last year.
"Volumes are sharply down [from a year earlier," says Kothari.
A small decline in Rupee Gold Prices could however reverse the recent trend, according to one Ahmedabad bullion dealer.
If the cost of Buying Gold fell to around Rs 29,000 per 10 grams – less than 10% from current levels – "then everybody would rush" reckons Girish Choksi.
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