Gold Prices Reach All-Time High Amid 25% Drop in Festive Demand; Surge in Investments for Coins and Bars
Gold demand during this year’s Dussehra celebration has seen a notable decline, with sales dropping by 25% to 18 tonnes compared to 24 tonnes last year. The India Bullion & Jewellers Association (IBJA) attributes this decrease to high gold prices, which remained at Rs 1.16 lakh per 10 grams. Despite the drop in volume, the value of gold sales increased by approximately 30-35% due to these elevated prices. As the festive season approaches, many customers are already placing orders for Dhanteras, Diwali, and weddings, anticipating that prices will not decrease soon.
Impact of High Prices on Sales
The surge in gold prices has significantly impacted consumer behavior this Dussehra. Last year, gold was priced at Rs 78,000 per 10 grams, making this year’s price of Rs 1.16 lakh a substantial increase. Surendra Mehta, national secretary of IBJA, noted that the high prices have deterred many buyers, leading to a decrease in sales volume. However, the value of sales has risen, indicating that while fewer people are purchasing gold, those who do are spending more due to the increased prices. Retail rates on Friday were recorded at Rs 1,16,883 per 10 grams, excluding GST, which adds an additional 3% to the cost. The making charges for gold jewelry also vary, ranging from 15% to 30%, depending on the complexity of the design.
Shifts in Consumer Preferences
Despite the overall decline in gold sales, there has been a noticeable shift in consumer preferences. Jewellers have reported a strong demand for gold and silver coins, particularly 5-gram gold coins and 20-gram silver coins. Saurabh Gadgil, managing director of PNG Jewellers, mentioned that investment demand for gold and silver bars remains robust, with customers continuing to make purchases despite fluctuating prices. Lightweight jewelry has also gained traction, and the exchange of old gold has contributed significantly to total purchases, accounting for approximately 50-55%. In central India, wedding jewelry, including diamonds and lightweight designs, has shown promising sales, indicating a positive sentiment for the festive season.
Regional Variations in Gold Sales
The gold market has exhibited regional variations in sales performance. In South India, there has been a slower pace of gold sales, with many consumers opting for gold bars that can later be converted into jewelry. Varghese Alukkas, managing director of Jos Alukkas, noted that sales of gold bars ranging from 10 to 20 grams have increased, while the push for diamond jewelry in various karats has not met the same enthusiasm. In contrast, central India has seen a stronger performance in wedding jewelry, with designs such as polki and lightweight options gaining popularity. This divergence in sales trends highlights the varying consumer preferences across different regions of the country.
Looking Ahead: Future Demand and Expectations
As the festive season progresses, many consumers are already preparing for upcoming celebrations, including Dhanteras and Diwali. Despite the current high prices, there is an expectation that demand will remain steady as customers anticipate further price increases. The cultural significance of gold during these festivals continues to drive purchases, as it is traditionally associated with good luck and prosperity. Jewellers remain optimistic, with many reporting strong bookings for lightweight jewelry and wedding pieces. The overall sentiment in the market suggests that while immediate sales may have declined, the long-term outlook for gold demand remains positive as consumers adapt to the current pricing landscape.
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