As Dhanteras approaches, jewellers and retailers in India are preparing for a challenging sales environment. Despite a recent reduction in customs duties, soaring gold prices are expected to dampen demand during this traditionally high-sales period.
Gold prices have surged to approximately Rs 80,000 per 10 grams, with silver surpassing Rs 1,00,000 per kilogram in Delhi. After six consecutive sessions of price increases, gold hit a record high of Rs 81,500 per 10 grams, while silver reached Rs 1.02 lakh per kilogram, as reported by the All India Sarafa Association. This price hike is largely attributed to increased demand from the festive and wedding seasons.
Gold Prices:
99.9% purity: Rs 81,500 per 10 grams
99.5% purity: Rs 81,100 per 10 grams
Silver Prices: Rs 1.02 lakh per kg
Suvankar Sen, Managing Director of Senco Gold and Diamonds, predicts a significant decline in sales volumes, estimating a 10-12% decrease compared to last Dhanteras. However, due to the higher prices, the value of sales may see a 12-15% increase.
Industry sentiment reflects concern over how quickly prices have escalated. Despite a duty reduction aimed at stimulating demand, the current gold prices have outpaced expectations, potentially leading to a slowdown in consumer appetite.
Saurabh Gadgil, Managing Director of P N Gadgil, notes that while volume sales might only meet last year’s numbers, the overall business value has increased due to rising prices. He attributes some of this to global uncertainties, particularly in the Middle East, which have made gold a more attractive safe-haven asset.
Despite the pressure on demand, some industry leaders maintain a positive outlook. Saiyam Mehra, Chairman of the All India Gem and Jewellery Domestic Council (GJC), believes consumer demand will remain stable, particularly due to over 40 lakh weddings scheduled after Dhanteras. He anticipates sales volumes around 20-22 tonnes on Dhanteras day, similar to last year.
Kalyan Jewellers’ Managing Director T.S. Kalyanaraman expressed optimism based on strong consumer footfalls in the second quarter and pre-book orders for the festive season. He noted that consumers are increasingly budgeting their purchases, indicating that while they may pause during price hikes, they are still engaged in buying.
The World Gold Council’s Regional CEO for India, Sachin Jain, highlighted a resurgence in gold buying, particularly from rural areas, driven by economic improvements and a good monsoon season. This could enhance rural incomes and increase gold purchases.
Overall, while the immediate outlook for Dhanteras sales appears subdued due to high prices, the combination of wedding-related purchases, investment sentiment, and potential rural demand may help stabilize the market as the festive season progresses.
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