Gold prices hitting records dampen demand during Indian festival celebrations
Smashed the Jewelry Scene, Leaving Lustrous Pockets Empty
MUMBAI: In an unexpected turn of events on Akshaya Tritiya 2021, the second-grandest gold-buying festival after Dhanteras, customer cravings for golden goodies faltered significantly. A rampant surge in precious metal prices unfurled a grinning, greedy streak among spenders, causing them to clamp their wallets shut.
According to the India Bullion and Jewellers Association (IBJA), jewellery store footfall rapidly increased during the evening, yet a 15% shortfall in demand compared to usual seasons ensnared the gold market.
The flurry of footfall in jewellery stores did pick up from the evening, but the volume remained notably lower than normal, admitted IBJA's secretary, Surendra Mehta.
This independence-celebrating holiday traditionally witnesses a surge in demand as the gleam of gold signifies prosperity and auspiciousness. Yet this time, retail consumers grappled with an agonizing decision - to indulge in the pricey luxury item or to channel their funds elsewhere.
Notably, big retail chains that hoisted jaw-dropping discounts on jewellery making charges sparkled in the market, snatching a slice of the diminished demand pie from small, single-store retailers. As the near-record high prices dulled consumer pocketbooks, the struggle to splurge on the sparkly accessory became real.
The sky-high prices have stretched customers' budgets, which partially explains why large retail chains were doing better than small-scale vendors this year, Mehta further elucidated.
Domestically, gold prices skyrocketed to an eyegasmic high of 99,358 rupees per 10 grams in April 2021, soaring approximately 30% since the last Akshaya Tritiya festival. However, the price quotient dropped to 95,000 rupees during the festivity itself.
Traditional sentiments remained upbeat, with consumers swapping old jewels for newfangled, glitzy options to better manage their festival and wedding budgets. Saurabh Gadgil, chairman of PNG Jewellers, noted, The golden glory wave of positivity persists despite those record-breaking rates.
On the flip side, Indian dealers waved attractive discounts of up to $20 an ounce, incorporating import and sales levies within the bargain deals to entice reluctant buyers.
It seems safe to speculate that the gold demand during Akshaya Tritiya 2021 might have experienced a lower volume but the value could be relatively the same or even slightly increased due to the higher prices, alleged Sachin Jain, the big boss honcho of the World Gold Council's Indian wing.
In intriguing twists, both big and small-scale retail establishments adopted drastic strategies, offering inducements on jewellery making charges in hopes of winning over budget-burdened buyers. However, the preference among many consumers remained gold coins and bars for investment purposes.
As the pandemic still galloped through the country, it's quite plausible that the associated restrictions could have hampered the accessibility of gold retailers, thus limiting the purchasing power. Moreover, the global economy's struggle to breathe normally, owing to a lingering hangover from the COVID-19 blitz, might also have influenced consumers' reluctance to spend on luxury items like gold.
Hypothetically, the melange of factors like economic instability, skyrocketing prices, and pandemic-linked restrictions likely shaped the demand for gold during Akshaya Tritiya 2021, a Hyderabad-based diamond's man sagely surmised.
Nevertheless, amidst the dulled interest, IBJA's Mehta expressed a mollifying sentiment, Although the demand was lower than usual, it still overshot the industry's expectations. Even in the face of record-high prices, retail buying didn't go off a cliff.
- The volume of demand for gold jewellery remained lower than normal, despite a flurry of footfall in jewellery stores.
- Sachin Jain suggested that the value of gold demand during Akshaya Tritiya 2021 might have been relatively the same or even slightly increased due to the higher prices.
- According to Saurabh Gadgil, the golden glory wave of positivity persists despite those record-breaking rates.
- The preference among many consumers remained gold coins and bars for investment purposes, rather than jewellery.
