Festive season to give fillip to gold sales in AP

The demand for gold in the state is expected to increase in the coming days and months. The impending arrival of the wedding season and the festival of Ugadi next week is expected to give a fillip to gold sales across the state.

Andhra Pradesh is the third largest gold market in the south, after Kerala and Tamil Nadu and according to the World Gold Council, the south of the country contributes 45 per cent of the country's demand of about 800 tons annually.

According to a senior World Gold Council (WGC) official, the rich agriculture belt in the state has always contributed to the heavy consumption of gold. With the last Kharif harvest in the state being a bumper crop, jewellers in the city clearly feel that gold consumption will go up.

K Shivram, South head of WGC said, "Whenever there is a good harvest, the agricultural community invests a large part of their disposable surplus into gold, for they very strongly believe that gold is investment and could be liquidated for cash during troubled times almost instantaneously."

"Also, there is a lot of gold buying during weddings in Andhra Pradesh, and lot of gold is given as 'streedhan'," Shivram pointed out.

Another factor that has always ensured good gold sales in the state have been the Andhra Pradesh state government's tax structure. "A P has been having a progressive tax regime where bullion tax is just one per cent and tax on jewellery is one per cent. It has been one of the few early states to effect the change. This has helped the jewellery trade to a large extent vis a vis their neighbours in other states," he said.

Guess estimates across jewellers in the city point to the fact that consumption may have grown by close to 5 per cent on an year to year basis, though there are no proper numbers available as to how many tons of gold does the state consume.

With new jewellery designs flooding the market and Hyderabad being famous for studded jewellery, the introduction of light weight gold jewellery has also expanded the market. " Young working women are more keen to wear something that reflects their attitude and lifestyle and they prefer jewellery that is not heavy and chunky, but light and delicate, sporting contemporary designs,that also goes with their some of their western outfits that they might choose to wear," Shivram said.

Nationally gold consumption has grown by about 4 per cent according to WGC estimates. "Taking the recycling of old gold jewellery into account which is a critical component, when there is huge volatility in prices, it would be safe to say that there has been a marginal growth of three to four per cent. The first three quarters were really good for gold but pulled back in the last quarter because of price volatility," he said.