MUMBAI: Gold regained a shade of glitter for retail buyers after local prices tumbled 10% in as many days as India unwound restrictions on the metal and international rates fell for the fifth consecutive day to a four-month low as investors found equities and the dollar more attractive.

Jewellers are welcoming back customers who had stayed away when gold rocketed to more than Rs 33,000 per 10 grams last August. Buyers have slowly begun purchasing ornaments again after prices fell by Rs 3,000 in the past 10 days to Rs 27,050.

Domestic supply, which was tightened when the current account deficit shot up alarmingly, has eased as the RBI has allowed more entities to import gold and banks to extend gold metal loans to jewellers.

Gold prices likely to dip further to Rs 25,000 levels

Jewellers, including marquee names such as Tanishq and Joy Alukkas, have reported higher grammage sales in the past two days. “There’s no doubt been an increase in terms of kilo gold sales over the past few days,” said Sandeep Kulhalli, vice-president, retail and marketing, Tanishq, the Tata group’s flagship jewellery brand.

Joy Alukkas, chairman of the eponymous Kerala-based jeweller, agreed with Kulhalli about the rise in volumes and said his company’s 46 stores reported a gradual increase. “Though buyers earlier held back for an anticipated duty cut, the sharp fall over the past week or so has spurred fresh buying,” he said. Alukkas and other jewellers such as Mumbaibased Kumar Jain expect prices to decline further to around Rs 25,000 levels in the next two months.

Jewellers in Mumbai’s buzzing Zaveri Bazaar gold market also said that retail buyers were back at stores. “Consumers had seen prices of Rs 29,500-30,000 for sustained periods till recently. Now with the rate at Rs 27,000, those who held back purchases have entered the market,” said Jain, a Zaveri Bazaar jeweller.

Rajesh ExportsBSE 2.07 %, one of the country’s leading exporters of gold jewellery with a turnover of Rs 30,000 crore, also reported higher sales (by weight). “We have been witnessing incremental volumebased buying in 80 stores across Karnataka both at the retail and wholesale levels,” said Rajesh Mehta, chairman of Rajesh Exports.

On Tuesday, spot gold in Mumbai traded at Rs 27,050 per 10 gm, including 10% customs duty and the premium charged by banks. Jewellers and customers across the board expect gold to fall to Rs 25,000-levels in two months on hopes the pro-reform Narendra Modi government will cut import duty from 10% to an estimated 6% and because of a correction in international prices. The international outlook is bearish on expectations that an appreciating dollar, rising US interest rates and booming equity m ..

On Tuesday, spot gold in Mumbai traded at Rs 27,050 per 10 gm, including 10% customs duty and the premium charged by banks. Jewellers and customers across the board expect gold to fall to Rs 25,000-levels in two months on hopes the pro-reform Narendra Modi government will cut import duty from 10% to an estimated 6% and because of a correction in international prices. The international outlook is bearish on expectations that an appreciating dollar, rising US interest rates and booming equity

The good news for jewellery buyers is that the futures market shows the market expects gold to slide further in the months ahead, on hopes of a duty cut. On Tuesday, the MCX August gold contract traded at an intraday level ofRs 25,846. This means that on Tuesday, when June gold futures traded at Rs 26,750, traders bet the price would fall by Rs 904 in August. The October futures contract quoted even below that of August, at an intradayRs 25,750, while the December contract traded at Rs 25,800.

The MCX gold price takes its cues from gold futures traded on Comex, part of the US-based CME group, the most diversified derivatives marketplace. Comex gold prices indicate that the bearish trend is likely to be sustained.