Whalesbook
Gold sales volume in India experienced a significant decline of 25% this Dussehra, falling to 18 tonnes from 24 tonnes last year, according to the India Bullion & Jewellers Association (IBJA). This reduction is attributed to a sharp 48% increase in gold prices, which stood at approximately Rs 1.16 lakh per 10 grams on Dussehra, excluding the 3% Goods and Services Tax (GST) and making charges. Although the volume of gold sold decreased, the overall value of sales climbed by 30-35% due to the prevailing high prices. A notable trend is the increased exchange of old gold for new jewellery, which now accounts for nearly 50-55% of total sales, helping consumers acquire new items despite the high cost. Demand for gold and silver coins and bars remains strong, with consumers viewing them as investments. Jewellers are also seeing encouragement in lightweight and diamond jewellery, and overall sentiment for the upcoming festive and wedding seasons remains positive, with consumers placing orders for Dhanteras and Diwali.
Impact:
This news highlights a significant shift in consumer purchasing behavior in response to high gold prices, directly impacting the retail jewellery sector and demand for gold as a physical commodity. It suggests that while price-sensitive consumers are reducing purchases, the segment willing to spend higher values and those leveraging gold exchanges remains active. This trend is crucial for investors tracking consumer discretionary spending, inflation indicators, and the performance of publicly listed jewellery companies.
Rating: 7/10
Definitions:
- Goods and Services Tax (GST): A comprehensive indirect tax levied on the supply of goods and services in India, replacing multiple earlier indirect taxes.
- Bullion: Gold or other precious metals in a bulk form, such as bars or ingots, as opposed to coins or jewellery.
- Making Charge: The fee charged by jewellers for the craftsmanship and labor involved in creating a piece of jewellery, which varies based on design complexity.