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Gold Rush Due To ₹ 2,000 Notes Withdrawal? What Jewellers Say

Jewellery sale has risen marginally after the central bank's move to withdraw ₹ 2,000 notes from circulation, but it can't be compared with the 2016 rush when ₹ 500 and ₹ 1,000 notes were discontinued, say jewellers.

The Reserve Bank of India's Friday announcement to take back ₹ 2,000 notes in exchange for lower denomination ones differs from the 2016 exercise as the ₹ 2,000 notes will remain legal tenders.

The 2016 exercise saw panic buying of the precious yellow metal, a trusted investment tool for middle-class Indians that was at half of its current prices. But the situation this time is different, says a top jewellers body.

"There's no huge rush, only a marginal increase in customers. The demand isn't like 2016 because it's not a note ban but a slow phase-out of the (Rs 2,000) notes," said Surendra Mehta, national secretary at India Bullion and Jewellers Association Ltd.

He also denied reports that customers are paying premium prices for jewellery.

"There may have been isolated incidents. Gold prices are already very high at over ₹ 60,000, while it was around ₹ 30,000 during demonetisation," he said.

The government guidelines require customers to submit KYC (Know your customer) details for transactions above ₹ 50,000 and PAN card above ₹ 2 lakh. For transactions above ₹ 10 lakh, the Financial Intelligence Unit of the government must be informed, he added.

Gold prices on Monday saw a rise of ₹ 485 per 10 gram and reached ₹ 60,760. Last Friday, it was at ₹ 60,275.

But the rising prices didn't impact gold sale in the country's financial capital, neither did the note withdrawal move. At the century-old Zaveri Bazaar in Mumbai, it appeared like any other business day.

The impact has been less this time due to a shift to digital payment mode after 2016, many jewellers believe. They claim only 10% of their transactions are in cash since most customers prefer digital modes.

Kumar Jain, a jeweller, claimed customer footfalls have almost doubled at his store over the weekend. "Anyway, hardly 10% customers pay in cash," he said, adding momentum was already there in gold sale due to the ongoing wedding season.

But business was just usual for some others.

"There's no impact on gold sale due to the latest move. Not many people pay in cash. I am not getting many ₹ 2,000 notes," Indra M Ranaut, another jeweller, claimed.

But then there were some who wanted to flush out the ₹ 2,000 notes from their cash holdings. "I had ₹ 2 lakh in ₹ 2,000 notes. I am buying jewellery for my daughter's wedding," said a customer at a shop in Zaveri Bazaar.