Gold prices on Monday jumped to Rs 48,320 from Rs 48, 310 per 10 gram, while silver climbed to Rs 48,510 from Rs 48,600 per kilogram, according to Good Returns website.
Gold jewellery prices vary across India, the second-largest consumer of the metal, due to excise duty, state taxes, and making charges.
In New Delhi, the price of 22-carat gold slid to Rs 47,120 per 10 gram, and in Chennai to Rs 46,240. In Mumbai, the rate was Rs 47,460, according to the Good Returns website. The price of 24-carat gold prices in Chennai came to Rs 50,850.
On MCX, August gold futures fell 0.23 per cent to Rs 48,046 per 10 gram. Silver July futures also collapsed to Rs 49,177 per kilogram. MCX has decided to accept gold and silver bars refined at domestic refineries for deliveries, subject to final regulatory approval.
Jewellers have started melting newer ornaments to reduce inventory as recession has started affecting their businesses. So far they were melting only the old jewellery they received in exchange on the sale of new ornaments.
Jewellers are also prepared to forgo the making cost on jewellery melting. Many hold inventories for long to cater to the diverse needs of customers. The cost of holding such inventories is becoming unbearably high.
With customers deserting stores and become very choosy, jewellers are under strain due to a pile up of inventories, margin pressure on the gold metal loans they had taken for jewellery making and not facing margin calls from lenders following price rise when they are not able to sell jewellery.