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Informist, Wednesday, Apr. 23, 2025

By J. Navya Sruthi and Ashutosh Pati

MUMBAI – Footfall in jewellery stores has waned in recent days as gold prices have surged to record highs. Jewellers have come up with attractive offers to increase sales, but their efforts seem to be going in vain. However, analysts and jewellers expect a correction as they think gold is 'over-priced' currently.  

"Gold is now above the ambit of the average common man... only a few people, the elite class, can go for gold right now," Anil R. Jain, a jeweller from Dagina Bazar in Mumbai, said. The footfall is nearly 50% lower than last year, despite the wedding season and Akshaya Tritiya being around the corner, Jain said.

The geopolitical tensions and trade war between the US and China have boosted gold's safe-haven demand, pushing gold prices to an all-time high of $3,509.9 per ounce on COMEX Tuesday. Tailing gains on the international exchange, the August gold contract on the Multi Commodity Exchange of India skyrocketed over 40% on year to a record high of INR 100,000 per 10 gm. The most-active June contract on the domestic exchange rose to a record high of INR 99,358 per 10 gm, up nearly 40% on year. 

"Jewellers are offering from 20% to 100% off on making charges. They are also giving a lot of gifts on every purchase of jewellery, from a very small INR 100 to a lakh of rupees (INR 100,000) as gifts. A few jewellers are also offering schemes where the buyer can book gold at a particular price and even if prices fluctuate in the future, the consumer will get the same rate as booked earlier," Manoj Jha, managing director of Kamakhya Jewels Pvt. Ltd told Informist. Despite offers in the market, "I can't see people walking in the store because of the very high gold rate", Jha added.

Akshaya Tritiya, which falls on Apr. 30, is the only hope jewellers are left with now. They expect sales to pick up, as traditionally it is believed that buying gold on this auspicious day brings them prosperity. However, jewellers expect sales to remain lower compared to previous years. Jha of Kamakhya Jewels said there will be a good amount of footfall on Akshaya Tritiya, but the buying will be low in terms of the weight. This is again because of soaring gold prices.

Amid skyrocketing prices and a dent in demand, jewellers have noticed an uptick in the exchange of old jewellery for new. "On average, 50% of turnover includes the exchange of old for new gold. So there is no demand for new," Kumar Jain, owner of Umedmal Tilokchand Zaveri, said. There is a lot of recycled gold in the market, people prefer to exchange old jewellery for new, he said.

OVER-PRICED?

Asked if the current high gold price is the new normal, Jain said prices have to stabilise before it becomes the new normal. He added that the market anticipates a correction in gold prices because prices have gone just "one way up".  

Kedia Advisory said the sharp rise in gold's comparative strength against key industrial commodities is signalling an early warning of potential market reversals. "The gold/platinum, gold/silver, gold/crude oil, and gold/copper ratios have all surged to technically overbought zones, historically marking inflection points," it said in a note. Kedia Advisory said gold's outperformance may not sustain. "Technically, such overbought conditions have often preceded a sectoral rotation or a pause in the bullish gold trend." 

After reaching a record high on Tuesday, gold prices corrected a bit on both COMEX and MCX. At 1645 IST, the most-active June contract was at INR 95,935 per 10 gm, nearly 3.4% lower than the record high of INR 99,358 per 10 gm. On COMEX, the same-month contract was down 2.3% at $3,338.8 per ounce.  End

US$1 = INR 85.42

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Saji George Titus

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