The recent upswing has forced jewellers to raise content of precious stones.
With gold prices setting new record highs every alternate day, jewellery makers are adopting various methods to minimise its use in diamond jewellery without compromising the look and feel of the ornaments.
While many have increased mechanisation and reduced manufacturing of hand-made jewellery, others are replacing gold’s weight with diamond to keep investors’ interest intact.
Ideally, gold content in diamond jewellery should be 35 per cent in terms of its weight. But, many jewellers have reduced gold content massively in the first half of the calendar year to keep the prices down.
| GOING FRUGAL Quarter-wise use of gold and diamond content in ornaments (%) | ||||
| Sept’10 | Dec ‘10 | Mar ‘11 | Jun ‘11 | |
| EAST | ||||
| Gold | 35 | 17 | 21 | 14 |
| Diamond | 65 | 83 | 79 | 86 |
| SOUTH | ||||
| Gold | 16 | 22 | 20 | 13 |
| Diamond | 84 | 78 | 80 | 87 |
| WEST | ||||
| Gold | 17 | 22 | 20 | 15 |
| Diamond | 83 | 78 | 80 | 85 |
| NORTH - EAST | ||||
| Gold | 36 | 38 | 50 | 35 |
| Diamond | 64 | 62 | 50 | 65 |
| Source : A diamond jewellery maker and retailer | ||||
In south Indian, jewellery makers have cut gold use to as low as 12 per cent, while in the west and east it is 15 per cent — down by eight per cent since January this year. In the north-east markets, however, gold use fell by a staggering 15 percentage points during the quarter ending June. “For the September quarter, the decline may be sharper due to continuous rise in gold and diamond prices,” said an analyst with a leading research firm.
Gold prices shot up by a phenomenal 34 per cent in rupee term to close on Friday at Rs 27,750 per 10 gram, while the same in dollar term jumped 31 per cent to $1,850 an oz. Till June, the yellow metal jumped by little over six per cent in both rupee and dollar terms. In comparison, rough and polished diamond prices have risen by just 10-15 per cent this year.
Gold prices increased Rs 225 on Saturday to close at a new record of Rs 27,975 per 10 gram from its previous close at Rs 27,750 per 10 gram. Silver followed suit and closed with a gain of Rs 2,420 to Rs 66,220 per kg on Saturday.
Talking about the impact of high gold and diamond prices, Mehul Choksi, managing director of India’s leading branded jewellery producer and retailer, said: “Jewellers keep a minimum three months inventory which will raise its value in proportion of the price spurt in the precious metals and stones. Hence, Indian jewellers will get the most benefit.”
Vijay Jain, the manufacturer and retailer of Orra brand diamond jewellery, said: “Use of CAD, CMC and casting machines for manufacturing diamond studded jewellery can save gold content by 10-15 per cent depending on the technology. The machine-made diamond studded gold jewellery items are not only stronger but they are also more durable. Because of their good finish, their looks are better.”
Modern technology allows jewellers to reduce overall use of gold too, he added. Orra recently introduced “Acquila” brand diamond-studded gold jewellery sets that look heavier but are lighter in weight in comparison to traditional jewellery sets.
High prices of gold and diamond have reduced the purchasing power of the average consumer. Hence, Surat-based Pravin Nanavati, joint secretary of Gujarat Heera Bourse and a diamond jewellery producer and exporter, has reduced the use of gold in jewellery items by 15 per cent. Today, jewellery price constitutes 50 per cent of gold as compared to 30 per cent earlier. “We are trying out all options to reduce gold use in jewellery produced by us, including cartage,” he added.
