Continuing robustness in gold prices, after having hit a record high last month, is unlikely to deter consumers as the festive seasons gradually picks up steam in eastern India. Industry members feel that the upsurge in sentiment will drive sales, although volumes might suffer.
The Durga Puja this week, will be followed up the auspicious gold buying period of 'Dhanteras' next month and then, the festival of Diwali. Subsequently, demand will be sustained on the back of the wedding period into the next calender year.
In value terms, this festive season could see double the growth witnessed last year, All India Gems and Jewellery Trade Federation vice-chairman Bachraj Bamalwa indicated.
“Despite gold prices this year being 15 per cent higher than last year, the sentiment in the market is good. We are expecting between 15-20 per cent growth over last year. In volume terms, there could be some growth, possibly about 5 per cent over last year,” Bamalwa said.
High prices, coupled with the slowdown, had led to only about 8-10 per cent growth in gold jewellery sales last year. But all that, seemingly, is set to change.
“There is no slowdown in India. The prices may well go up, but the rush to buy gold is likely to remain. There is still huge demand. People are still expecting that the prices will go north and are continuing to buy. The jewellers are busy,” said Gems and Jewellery Export Promotion Council regional chairman Pankaj Parekh.
The volume of sales, however, are reducing as more consumers are buying jewellery with reduced grammage, while purchase of bullions and coins is also picking up, according to Parekh. “The margin (for jewellers) is not necessarily going down, but the volumes are eroding,” he added.
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Bamalwa further said that, apart from lower volume, consumer preference is also shifting towards studded jewellery, particularly diamond. “People are preferring diamond jewellery as the stone's prices have not gone up that sharply. Studded jewellery as a whole is becoming more popular,” he explained.
Overall, though, the industry remains bullish given the overall economic upsurge nationwide. “Not only does the stock market play an important role, but the harvest this year should be good. Also, unlike last year, there have been no job or salary cuts, and the government salaries have also seen a rise,” Bamalwa said.