| Date: |
12-08-2011 |
| Subject: |
Rising Gold Price Hits India Gem, Jewelry Exports |
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NEW DELHI – The recent surge in the price of gold is affecting India's gems and jewelry exports, with overseas customers holding back orders and exporters unable to settle product prices as bookings for the peak festival season are about to start, traders said, Thursday.
Gems and jewelry account for about a fifth of India's total exports. The sector shipped $43.1 billion of goods in the last fiscal year ended March 31, up from $29.4 billion the previous year, mainly due to demand from the U.S.
Usually, Indian exporters book orders after sending samples to potential clients. But the rise in the price of gold has been so sharp that they are unable to fix a price and have to send fresh quotations.
"How can we sell in such a market? The process of negotiating a price becomes so difficult," said Rajiv Jain, chairman of the Gem and Jewelry Export Promotion Council.
Overseas spot gold rose to a record $1,814.89 a troy ounce Thursday. The downgrade of U.S. debt rating by Standard and Poor's has driven up demand for the yellow metal, considered a safe bet at times of economic uncertainty.
"This kind of a price situation is something unimaginable," Mr. Jain said. "There are no order cancelations, but everything is on hold."
Mr. Jain said it is too early to predict whether India's gems and jewelry exports will be able to achieve the target of $50 billion by the end of the current financial year.
He said worries over the U.S. economy will likely have an impact as the U.S. accounts for a quarter of Indian gems and jewelry exports, either directly or via other countries.
"If there's a problem in the U.S., it's a matter of great concern," Mr. Jain said. "It's a wait and watch situation. We are hoping that there will be a correction in gold prices and the situation will again stabilize."
Sailesh Sanghari, a board member at the Gem and Jewelry Export Promotion Council, said the volatility, more than the high price of gold, is affecting the gems and jewelry trade. "This will have some impact on exports."
Festival-season bookings usually start around this time, he added.
Source : online.wsj.com
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