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Gold jewellery sales are likely to remain 15-20% up, this week to Diwali, on a rapid rebound in consumer sentiment across the country.
After a lackluster demand in the last four – five months due to uncertainty in gold supply policy resulting into non-availability of the raw material, jewellery sales revamped in the couple of weeks which changed the overall sentiment of this sector. But, consumers who had earlier stalled their demand have now started to come. They have started to buy afresh in a big way as Diwali is around the corner.
Many orders have already been placed in advance for Dhanteras, a day which is considered auspicious to buy gold according to Hindus. This year Dhanteras is on November 1.
“This year we expect gold demand to be higher than last year by around 15%. Orders have already started to pick up and advanced orders have been placed for gold jewellery for delivery on Dhanteras,” said Rajiv Popley, director of Popley Group.
Echoing similar response T S Kalyanaraman, chairman and managing director of Kalyan Jewellers, said, “This year we have already seen a pick up in demand and sales are better compared to what it was during Dhasera. We saw a lot of casual purchases then, but now along with causal purchases we have got Dhanteras orders as well as wedding orders.
Meanwhile, gold supply has been a major challenge for jewellers this year. Many jewellers are facing a supply crunch of gold due to the government hiking the import duty on gold to 10% as well introducing the 80:20 formula under which importers will have to mandatorily supply at least 20% of the imported gold to exporters.
The supply squeeze has lifted premiums on gold to Rs 2,000 per 10 grams now from the usual level of 1% over the near month price quoted on the Multi Commodity Exchange (MCX).
“It is an abnormally high premium. But, in the last few weeks sales have improved,” said Haresh Soni, chairman, All India Gems & Jewellery Trade Federation (GJF).
Spot gold in Mumbai’s Zaveri Bazaar was quoted at 8-week high of Rs 32,015 per 10 grams and this has not had an impact on consumer sentiment.
In the coming week, bullion traders’ expect the price of gold to be lower and is not expected to sustain above Rs 32,000 per 10 grams.
