Sudarshan Manchanda, a New Delhi-based housewife, is a worried mother today. Surging gold prices are giving her sleepless nights as she prepares for her daughter's marriage at the end of this month. She is looking to recycle some of her old jewellery as her budget would otherwise go haywire if she bought all of the ornaments she needs.
At Rs 13,000 or so per 10 grams, gold prices have surged more than 30 per cent from a year ago, and consumers are left with any other option than either recycle or go that’s forcing many consumers to either recycle or go for studded jewellery.
The result: sales at jewellery stores have dropped 20 to 25 per cent from last year. The drop is significant given the fact that Indians buy nearly 800 tonnes of gold annually and account for a fifth of the gold consumed worldwide annually, according to the World Gold Council. The country, a KPMG study says, has a $13.5 billion jewellery market.
“The market for plain gold jewellery is as good as dead,” said Sahil Narula, a jeweler based in Karol Bagh – a traditional hub for gold and silver ornaments in the capital city. “What is selling today is studded jewellery, especially with diamonds, as it has more value than plain gold," Narula said.
The Indian market broadly comprises gold jewellery and fabricated studded jewellery. Gold jewellery forms 80 per cent of the market, a reason why the rise in prices is hitting the industry hard.
Over the past fortnight, gold prices scaled new highs, as a meltdown across stock markets and a weakening dollar drove investors to increasingly look to pump their money into gold. In global markets, gold prices have risen to more than $1,000 an ounce from $650 an ounce. Back home, it’s hovering around Rs 13,000 per 10 grams compared with about Rs 10,000 a year earlier.
The spike has come at a time when several jewelers are buying floor space at new malls, expanding their existing outlets and, in some cases, opting for mergers as part of a move to consolidate operations and scales.
But lately, they are complaining about dwindling customers.