The gold price in India today has soared sharply, shooting all the hopes the Indian bullion industry had of a gold rush festive season. That happens even though the import duty came down sharply just two months ago and had raised the industry’s optimism.
Prithviraj Kothari, president of the India Bullion and Jewellers Association, said the industry was in for a high demand push after the duty cut was announced, but with gold prices reaching a recent high, this enthusiasm might be tempered by as much as 20% in terms of volume during the festive season.
In India, this festival season is a season of high demand for gold. Diwali and Dussehra are perceived as good times to make a purchase in gold. However, the trend is changing, and consumers are buying more during the year than waiting until these festivals to purchase.
Gold price in India are far more higher than last year during festive season
The jewel has registered an uptick of more than 25 per cent against the festive season last year. Soaring prices have eaten into the consumers’ pound, forcing them to opt for lighter and less expensive jewelry instead of gold.
In India, the cut in gold import duties at the end of July from 15% to 6% brought down prices initially. Prices, however, have since shot up by 13.2% to all-time highs. The rise appears to be part of a broader global rally in gold markets.
Though the demand has been excellent for the first few days following the cut in duties, jewellers are now reluctant to accept full delivery of their pre-booked quantities because the prices have been too high. Most opt for light jewellery: that can be bought cheaper, and is in great demand.
High rates have dampened what would otherwise have been a robust sales spurt in the festive season. Consumers are under financial pressure, and this fact is a contributory reason for the change in buying behavior as well.
The astronomical increase in gold prices has been squeezing both the consumer and jeweller. The jewellers responded by cutting down their prices to reach the budget-conscious customers.
There is considerable uncertainty within the Indian bullion industry regarding the festive season and how it will pan out given the high prices of gold. The entire bullion industry is, therefore, keeping an eye on consumer sentiment and market trends while gauging how that would affect sales.
Also, see: Gold price in India today dips further, silver price soars
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