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Mumbai/Singapore: Wedding invitations have been sent and the festive season is expected to be full of excitement. This is good news for India’s gold jewelers, as the relief from the pandemic means they can make a recovery in their most lucrative selling period.
In the last quarter, Indians typically boost their purchase of gold jewelery for wedding ceremonies, while increasing sales of coins and bars for investment during a series of celebrations culminating with Diwali, or the festival of lights. Which is being organized in November this year.
But during the pandemic, they have scaled back their spending mainly on the precious metal as prices have soared and movement restrictions have crippled the economy, delaying weddings and silent festivals. Now, daily-infections have hit a nearly seven-month low and the hike in vaccination rates is adding to the optimism of a better sales season.
Jewelers are being further encouraged that sales volume will increase due to a 17% fall in gold prices in local markets since last August, as the precious metal’s safe-haven price collapses amid a global economic recovery from the pandemic. I have come.
Jewelery accounts for about 60% to 70% of gold consumption in India. Data from the World Gold Council shows that Indians bought 315.9 tonnes of gold-use jewelry in 2020, which is almost equal to the combined purchases in the US, Europe and the Middle East. China is the largest buyer of 433.3 tonnes.
According to Ashish Pethe, Chairman, All India Gem and Jewelery Domestic Council, the fall in demand and lower prices could lead to a 15% increase in gold sales in the last quarter as compared to the same period two years ago.
Data from the World Gold Council shows that Indians bought 194.3 tonnes of gold in the October-December festival period of 2019 and 186.2 tonnes during the same period last year.
“2020 was an aberration,” Pethe said of last year’s peak sales period. Gold prices have moderated this quarter and are favorable; Marriages are also very numerous in number.”
Bullion hit a record last year on massive stimulus measures taken by central banks during the pandemic that drove investors’ money into exchange-traded funds. Investor demand for the precious metal is now waning as the Federal Reserve has indicated it may begin to reduce asset purchases.
“In the absence of strong investor interest, the physical market will set the floor,” said Suki Cooper, an analyst at Standard Chartered plc, and recent trading data points to major centers responding to the recent drop in gold prices. ” He said India’s bullion imports have also increased and demand has picked up with the market entering the peak buying period.
It was not just during last year’s festive season that Indian purchases of gold declined. According to Chirag Sheth, a consultant at Metals Focus Ltd, after falling from a two-decade low of 446.4 tonnes in 2020, sales could grow by 50% in 2021.
Cautioning that there remain potential safe-haven factors that could exacerbate bullion – particularly the energy crisis that could lead to high inflation and stifle global growth – Sheth said that “if prices remain the same Where they last till the festive season, the sales will be good.” –bloomberg
Read also: Jewelers sell gold for less than Rs 100 as digital buying grows in India
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