Festive Demand
Dussehra gold, jewellery sales rise 10-15% to INR 320-350 bln; volume falls
This story was originally published at 17:14 IST on 14 October 2024
Register to read our real-time news.Informist, Monday, Oct. 14, 2024
By Sandeep Sinha
MUMBAI – Value of gold and jewellery sales during the 10-day Dussehra festival rose 10-15% on year to INR 320-350 billion, though sales volume fell 10-12%, according to trade and industry sources. The rise in sales value was despite the sharp rise in prices of the yellow metal in the last 12 months, mainly because of its safe-haven appeal, buying by global central banks and interest rate cut by the US Federal Reserve.
Gold purchases during the Dussehra festival are considered auspicious among Hindus as they are expected to bring prosperity and wealth. "During the 10-day festival, around 40-45 tonnes of gold and gold jewellery worth INR 320-350 billion are expected to have been sold across India," Kumar Jain, national spokesperson for the India Bullion and Jewellers Association, told Informist. "There is a fear of missing out and expectation of a further rise in gold prices is also supporting demand."
During Dussehra in 2023, approximately 45-50 tonnes of gold and gold jewellery worth INR 300 billion were sold across India. Since the previous year's Dussehra, gold prices have risen 25.9%, or by INR 15,708 per 10 gram, on the Multi Commodity Exchange. "The demand for gold this year was seen higher in tier two and tier three towns as compared to metro cities," said Surendra Mehta, national secretary, India Bullion and Jewellers Association. Normal rainfall this year and the expectation of a bumper Kharif crop, which is likely to boost rural income, are also aiding the sentiment. Rural India usually accounts for more than 60% of gold demand in the country.
"The high price levels in 2024, driven by global economic uncertainties and inflation, may temper some of the physical gold purchases," said Prithviraj Kothari, the managing director at RiddiSiddhi Bullions Ltd. "However, cultural factors will likely sustain demand for gold, even if buyers reduce the volume or opt for lighter-weight items to manage costs".
Gold prices in the domestic market have gone above the pre-Budget level due to a sharp surge in international prices. On Jul. 23, Finance Minister Nirmala Sitharaman in her Budget speech for 2024-25 (Apr-Mar) announced a cut in the basic customs duty on gold and silver to 6% from 15%, which led to a sharp fall in gold prices. The price had fallen by INR 4,208, or 5.8% to INR 68,510 per 10 gram. Since then, prices have once again surged and hit a new all-time high of INR 76,467 per 10 gram earlier Monday. At 1500 IST, the most active December GOLD contract on the MCX was flat at INR 76,282 per 10 gram.
Internationally, gold prices have surged nearly 28% year to date, supported by safe-haven demand amid escalating tensions in West Asia, central bank buying, and expectation of further interest rate cuts by the US Federal Reserve. A fall in interest rate reduces the opportunity cost of holding gold. The most active December contract on COMEX was unchanged at $2,675.8 per ounce. COMEX price touched an all-time high of $2,708.7 per ounce on Sept. 26.
"Gold is expected to continue its bull run for the next six months for the targets of $3,000 an ounce (INR 84,000/10 gram) by Akshaya Tritiya (April 30, 2025)," Kothari said. If you are considering gold for the long term, purchasing during Dussehra can be a strategic move. However, always monitor price fluctuations and consider diversifying with options like Gold ETFs for liquidity, Kothari said.
Going ahead, gold buying is likely to be robust because of Diwali festival at the end of October and the wedding season from December to February, said Sachin Jain, India region chief executive officer of the World Gold Council, in a note. End
US$1 = INR 84.06
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Akul Nishant Akhoury
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2024. All rights reserved.
To read more please subscribe
Share this Story:
