Falling gold prices and a good monsoon have revived demand for the yellow precious metal, which has recorded sluggish sales in the past few months, say jewellers in Indore.
Apart from the urban customers, people from faraway towns and villages too are now travelling to Indore to make purchases.
“Footfalls are rising. A section of consumers is taking the opportunity to purchase jewellery after the fall in gold prices. Then there are those who are in wait-and-watch mode as they feel that the prices will come down further,” Sumit Anand of Punjabi Saraf jewellers said.
The jewellers are banking on demand picking up further from rural areas ahead of the wedding season in November.
Unseasonal rains and hailstorm earlier this year had damaged the rabi crop and dampened rural demand for gold jewellery. However, prospects for the kharif crop output are looking bright after the recent spell of rain.
Jewellers say purchasing for the wedding season has already begun as people look to buy jewellery ahead of Shraadha, a 15-day period when people don’t purchase gold jewellery. The sales are expected to increase further during the harvest season in October.
The price of 24-karat gold fell to a new low on Tuesday before settling at Rs 25,490 per 10 gm. The fall was triggered by a drop in global bullion to a five-year low of $1,080 an ounce (Rs 68,687.95 per 31.10 gm). “The prices could come down further in the coming weeks. Demand is expected to pick up from the rural areas,” Indore Sona Chandi Vyapari Sangh president Hukumchand Soni said.
Last year, the market was subdued due to high gold prices coupled with high inflation.
The wedding season in May this year also failed to revive the market as crop damage had an adverse impact on the rural demand.
However, the jewellers are hoping for a better response this time around. “Farm output matters as people will buy jewellery only when they have money, otherwise they will use the old jewellery or exchange it for new ones,” jeweller Nitin Khandelwal said.
At the beginning of 2015, the World Gold Council had forecast a revival in Indian demand for gold up to 1,000 tonnes as a direct result of its robust economic growth.