Gold buyers may have to deal with 2 pricing systems in Kerala

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Looks like gold buyers in Kerala will have to live with two pricing systems. After the Kerala Jewellers Federation (KJF) came out with a new pricing mechanism last week, the All-Kerala Gold and Silver Merchants Association, which has been determining the daily market price for over a quarter century, is planning to continue its own pricing mechanism. B. Girirajan of Bhima Jewellers, President of gold and silver merchants body, told Business Line that jewellers and gold merchants in Kerala had all along been following the prices determined by it. The rates fixed by it every morning, which the media features, are based on international and domestic market indicators. These rates were fair to both buyers and sellers, Girirajan said.
“If the KJF wants to have its own pricing system, let it be,” he said. “We will continue with ours.” The KJF had announced a new pricing system based on the rate at which banks sold gold to them. It said that the merchants’ association rates, which were lower, did not reflect market realities and encouraged grey market. Since the KJF members sourced their gold from official channels at higher prices, the merchants’ rates gave them a thin profit margin. Many of the other dealers were getting gold from the grey market at lower prices, they said. The KJF was concerned about the growing trend in gold smuggling after the Union Government curbed imports.
The KJF rate per gram is ` 5-15 higher than the merchants’ rate. Girirajan said that because of import restrictions, gold was in short supply. More than a third of the gold now being used by jewellers was recycled from old jewellery that was either exchanged for new-design ornaments or sold outright. He said that gold sold in Kerala was of high quality – hallmarked and 22 carat – but prices were the lowest in the South. For instance, on Tuesday, while one gram of gold quoted at ` 2,820 in Kerala, it ruled at ` 2,910 in Bangalore.
Source: Hindu business line

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