Akanksha Kunnur, a working woman in her mid-forties, is happy as gold prices could not beat her zeal to buy jewellery for her daughter’s wedding next April.
Kunnur did not overshoot her budget but managed to buy more jewellery by slightly compromising on the caratage of the yellow metal while maintaining the look and feel of the ornaments.
She bought ornaments made of 18 carat gold, instead of the 22 carat hallmark jewellery she had planned earlier. As a result, with the Rs 1,50,000 she had set aside to buy seven tolas (one tola = 10 grams) of 22 carat jewellery, she managed to have an extra eight grams of gold jewellery. Surprisingly, the look and certification of the 18 carat gold ornaments is similar to the 22 carat hallmark jewellery.
Many price-sensitive gold consumers like Kunnur have shifted to lower caratage gold ornaments to continue their investment in the greenback, an avenue for the hedge against inflation. Jewellery makers have also offered 100 per cent return on the gold content in the jewellery items. Hence, consumers are enthusiastic to buy lower gold caratage jewellery not only in developing countries like India, but also in developed nations like the US — the country that buys 40 per cent of the world’s gold jewellery items.
Confirming the development, Ajay Mitra, managing director (Asia Pacific) of the World Gold Council (WGC), said: “Consumers do not want high gold prices to defer their annual investment plan by reducing caratage. Many consumers have even shifted to silver jewellery. WGC plans a massive drive through media advertisement, hoardings etc in the US to retain existing customers and bring back lost customers to gold.”
A similar trend has been witnessed in India. According to an estimate, the sale of 22 carat jewellery items has reduced by almost 40-50 per cent in favour of 18 carat jewellery, while a significant percentage has shifted to gold plated silver jewellery.
Tara Jewels, a Mumbai-based jewellery manufacturer and exporter, has recorded nearly 20 per cent jump in sales of silver jewellery and over 50 per cent increase in sales in jewellery of reduced caratage.
Gold has offered a return of over 23 per cent in the first 11 months of the current calendar year. The prices of the precious metal surged to Rs 20,540 per 10 grams on November 30, as against Rs 16,690 per 10 gram on January 1. On a year-on-year basis, however, the return in gold was even higher at 24.23 per cent as the prices of the yellow metal was lower at Rs 13,435 per 10 grams a year ago.
“Consumers’ taste has changed swiftly in traditional jewellery like Kundan which uses 14 carat gold now from 18 carat earlier,” said Mehul Choksi, chairman of Gitanjali Gems, a jewellery manufacturer and exporter. The dramatic shift in the consumption pattern of the yellow metal is evident from WGC’s third quarter data that show that India’s gold demand from the jewellery sector increased 73 per cent to 513.5 tonnes as compared to 297.2 tonnes in the corresponding period of 2009.
The rapidly growing investment demand until the second quarter of the current calendar year pressed a pause button in the third quarter. India’s net retail gold investment demand remained flat at 45.1 tonnes, an increase of one per cent from the third quarter of the previous year.
