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Informist, Monday, Oct. 28, 2024

 

By Sandeep Sinha

 

MUMBAI – As India gears up to celebrate Dhanteras on Tuesday, a day traditionally marked by the buying of gold and jewellery, market experts expect a 15-16?cline in demand because of the sharp increase in gold prices. Sales volumes are expected to hover around 25-30 tonnes, down from 30-35 tonnes last year, according to India Bullion and Jewellers Association National Secretary Surendra Mehta.

 

Despite the likely drop in volume, the value of gold sales is likely to remain steady at around INR 200-235 billion because of the increase in gold prices. Dhanteras marks the beginning of Diwali and is considered an auspicious time for purchasing precious metals, utensils, and other valuables. The day is significant for jewellers, who eagerly prepare for the festive rush by keeping their shops open until midnight, anticipating brisk sales and vibrant footfall.

 

"Gold jewellery demand during Dhanteras and Diwali 2024 is under pressure due to record-high prices, with gold hovering around INR 80,000 per 10 grams. Despite this, jewellers expect demand to persist, particularly due to the ongoing wedding season and the cultural significance of gold during festivals," Prithviraj Kothari, managing director of RiddiSiddhi Bullions, said.

 

Gold prices on COMEX have risen 40.7% to $2,754.6 per ounce from $1,957.7 an ounce on Dhanteras last year (Nov. 10). On the Multi Commodity Exchange of India, gold prices have gained 31.6% to INR 78,532 per 10 gm from INR 59,659 per 10 gm. The price increase is lesser in India because the government lowered the import duty on gold and silver to 6% from 15% on Jul. 23, leading to a fall in domestic prices.

 

"Gold price volatility may cause a temporary dip in sales. This can be mitigated with broader retail outreach and tapping into new markets," Saurabh Gadgil, chairman and managing director of PNG Jewellers said. “If international conditions stabilise and we see a short-term price correction, we could be looking at an exceptionally strong Diwali season".

 

Jewellers told Informist they are seeing very little distress sales or exchange of old jewellery for new. However, most festive and wedding buying occurred during late July and early August, when the gold prices were around INR 68,000-INR 70,000 and will now take physical delivery on Dhanteras. The prices have now surged by INR 8,000-INR 10,000 since then.

 

Jewellers are running various promotional schemes and offering discounts on making charges and offering prizes to attract customers to stores.

 

Sales may still match or exceed last year's levels in value terms as consumers shift towards lightweight jewellery and coins, Kothari said. Some retailers are seeing increased pre-bookings, which suggests that demand could stabilise even at higher price points. However, volume-based demand may struggle, he said.

 

"Volumes will take a hit by 12-15% due to record prices. Value wise, we will see marginal growth of 10%," Suvankar Sen, managing director and chief executive officer of Senco Gold and Diamonds, said.

 

Demand for Diwali Dhanteras will be driven by marriage season buying and token purchases by customers during the auspicious period. Diamond light-weight jewellery is a driver along with wedding necklaces and bangles in gold, Sen said.

 

Kothari expects rural demand, driven by the good monsoon, to help offset some of the slowdown in demand. Additionally, gold is an attractive investment, especially amid global uncertainties, which could further bolster demand during Diwali.

 

As prices have surged significantly, Sen said platinum chains and bracelets for men are a good alternative.

 

Dealers currently offer gold at a discount of $9.2 an ounce over the official international price. The premium or discount on the international gold price depends on factors like dollar/rupee exchange rate, local taxes, and import restrictions. End

 

Edited by Saji George Titus

 

 

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