US consumers demand low carat jewellery

Diamond jewellery consumers in the US, the world's largest fashion market, have started demanding items with low gold quantity in accordance with their expenditure target.

According to reports, a section of white gold consumers have started switching to silver so that the cost of jewellery items does not pinch their pocket.

Although, the market for low purity gold in diamond jewellery was present earlier as well, the demand has shot up sharply in the last few months, confirmed an exporter.

Sources said the purity level had been brought down to 10 carat from 14 carat earlier in the jewellery exported to the US.

This makes sense as fresh investment in gold and diamond jewellery may prove unviable specially when the rate of unemployment is rising and housing demand is falling in the US.

The trend will help Indian gold jewellery exporters as they are struggling with the surging cost of the yellow metal.

"A combined effect of economic recessionary indications and surging precious metals prices have caused a slump in the US jewellery demand. Only the cost conscious consumers have toned down their purchases as of now. But if the country's economy goes into recession, a further slump can not be ruled out," said Pravin Nanavati, joint secretary of the upcoming Gems and Jewellery Park, Surat. Nanvati is also a jewellery manufacturer.

According to officials of the Gems & Jewellery Exports Promotion Council (GJEPC), jewellery sales to the US have declined about 7 per cent. Gold prices in the last three months have perked up by 10 per cent to around $920 an ounce after hitting the all-time high of $1,011.25 an ounce on March 20. Similarly, diamond prices have gone up by 10-15 per cent.

"As the orders from the US are passed to individual factories, the trend may continue," said Vasant Mehta, vice-president, International Diamond Manufacturers Association (IDMA), and vice-chairman of GJEPC, the apex body promoting jewellery sales.

Meanwhile, jewellery exporters are still hopeful that, like in the past few years, orders would flow in the forthcoming jewellery event in Las Vegas, US, from May 30 to June 3, 2008.

According to government estimates, the total jewellery exports to the US were to the tune of $4 billion during financial year 2008 as against $2.9 billion in FY06.