Gold glitters: Jewellers bet big on Gudi Padwa, Akshay Tritya and wedding season to drive demand despite rising prices
Fri Mar 29 2024
Gold prices in India continued to sparkle throughout the fiscal year 2023-2024, propelled by escalating geopolitical tensions globally. The yellow metal exhibited significant volatility, primarily influenced by decelerating growth in advanced economies and the monetary tightening policies pursued by global central banks in response to elevated inflation levels.
During FY24, the price of MCX gold surged over 12 per cent, climbing from approximately ₹59,400 per 10 grams at the year's onset to around ₹67,000 per 10 grams by the end. This fiscal period was marked by various global crises, such as the Israel-Hamas conflict and the persistent Russia-Ukraine war.
“Gold prices have moved steadily higher over the last six months as expectations of a dovish Fed policy have been gaining ground. The fall in interest rates is a positive for gold prices. The gold prices breaking key long-term resistance levels indicate there may be strong momentum which may continue over the near to medium term, some profit may not be ruled out though. The key monitorable remains the expectations building around the timing of Fed rate cut," said Joseph Thomas, Head of Research, Emkay Wealth Management.
However, this continuous surge in gold prices is unlikely to affect the demand for the precious metal in the country, according to jewellers.
“In light of the recent surge in gold prices, we've observed a remarkable trend in customer sentiment and behaviour. Positive feedback from customers pleased with their timely purchases as prices continue to rise, coupled with upcoming festivals like Gudi Padwa and Akshay Tritya, the demand is expected to further drive business. Anticipation is high for the upcoming wedding season in the following quarter, which is poised to amplify this positive sentiment," said Saurabh Gadgil, Managing Director and CEO, PNG Jewellers.
According to the World Gold Council (WGC), India is one of the largest markets for gold, and growing affluence is driving growth in demand. Gold holds a pivotal position within the nation's cultural fabric, revered as both a repository of value and a marker of affluence and prestige, integral to various ceremonies. Within the rural communities, a profound connection to gold intertwines with pragmatic assessments of its jewellery's portability and security, fostering its perception as a sound investment.
“In India, this may initially impact customer buying patterns, yet optimism is prevalent as Akshay Tritiya is around the corner, where we anticipate a surge in gold jewellery purchases. Despite potential volume effects due to budgetary considerations among Indian customers, historical trends suggest a positive outlook for gold sales," said Mitesh Khimji, Director of Khimji Jewellers.
Looking Ahead
Jewellers further anticipate a robust growth in the upcoming quarter as compared to previous quarters.
“Looking ahead, we anticipate a robust quarter, with expectations of a 10% growth over the previous quarter. Despite the upcoming elections, the prevailing positive sentiment and growing consumption in India bode well for sustained gold demand, fostering optimism about future sales and a prosperous season for both customers and the industry at large," Gadgil added. On the other hand, WGC suggest that a notable uptick in the demand for the yellow metal in the coming months is likely to be moderate due to upcoming general elections.
“Demand is unlikely to see a notable uptick in the next couple of months, even should prices moderate, as the country’s impending general elections (April to June), will see the movement of gold and cash closely monitored. Data shows that gold consumption fell during three of the last four general election periods. Some improvement in demand could be expected around the time of Akshaya Tritiya (May10), as this is traditionally considered to be an auspicious time to buy gold," said Kavita Chacko, Research Head, India World Gold Council.
Source: https://www.livemint.com/