DELHI — Traditionally, the festive season coupled with the wedding period in India sparks a significant rise in gold purchases. However, with gold prices now soaring around ₹80,000 per 10 grams and silver exceeding ₹1,00,000 per kilogram in Delhi, the forecast for sales this Dhanteras appears bleak.
Record High Gold Prices
On Wednesday, gold and silver prices reached unprecedented heights in the Indian capital, driven by ongoing demand during the festive and wedding season. According to the All India Sarafa Association, gold prices increased by ₹500, hitting a record high of ₹81,500 per 10 grams. Meanwhile, silver prices jumped by ₹1,000, reaching ₹1.02 lakh per kilogram. Specifically, gold with 99.9% purity and that with 99.5% purity both saw a rise of ₹500, priced at ₹81,500 and ₹81,100 per 10 grams, respectively.
Sales Volumes and Values Impacted
Suvankar Sen, Managing Director and CEO of Senco Gold and Diamonds, indicated that the rise in prices would negatively affect sales volumes. He predicts a decline of at least 10-12% in the quantity sold compared to last Dhanteras, despite a potential increase of 12-15% in sales value due to elevated prices.
Sen noted that the rapid increase in gold prices, influenced by global uncertainties, has led to significant market shifts. “Prices are at all-time highs both domestically and internationally,” he stated. Although a recent duty cut provided some relief to consumers, prices have quickly rebounded above record levels, dampening consumer enthusiasm.
Gnanasekar Thiagarajan, co-founder and CEO of Commtrendz Research, explained that consumers typically adapt to higher prices over time, and demand eventually recovers. He stated, “Despite the current high prices, it is common for consumers to get accustomed to these changes.”
In contrast, Saurabh Gadgil, Managing Director of P.N. Gadgil Jewellers, expressed a more cautious outlook, suggesting that the industry might only manage to match last year’s sales figures in volume terms.
Global Influences on Gold Prices
The surge in gold prices can be attributed to various global factors, notably geopolitical tensions in the Middle East. Gadgil remarked that the situation in Israel and surrounding regions has driven gold prices upward as investors seek safety in gold as a haven. “During Dussehra, we witnessed a value increase due to rising gold prices. Business saw a growth of 15-20%, allowing us to meet last year’s numbers in volume,” he explained.
A Mixed Outlook for Industry Players
Despite the historically high prices, some jewelers and retailers maintain a hopeful perspective. While acknowledging the potential decline in consumer demand, they believe that central bank purchases and investment demand could offset these losses.
As the festive season progresses, the jewelry market is expected to experience fluctuations as consumers weigh their purchasing decisions against the backdrop of rising prices. Many retailers hope that once the initial shock of the price increases subsides, buying patterns will stabilize, allowing sales to recover.
Conclusion
The Dhanteras festival, traditionally marked by increased gold buying, faces challenges this year due to unprecedented price levels. With gold prices hovering around ₹81,500 per 10 grams and silver at ₹1.02 lakh per kilogram, many in the industry anticipate a decline in sales volumes. However, higher values might still lead to overall growth in revenue. The coming weeks will be critical in determining how consumers navigate these price changes and the broader implications for the gold market in India.
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