In the wake of the price of pure gold inching closer to Rs 70,000 per 10 grams, the market is witnessing a notable absence of customers. Over the span of just one month, prices in Mumbai’s Zaveri Bazaar have surged by nearly 10 percent, currently standing at around Rs 68,500 per 10 grams. The Mumbai spot market finds itself in a substantial discount ranging from $15–20 per ounce, or Rs 400–550 per 10 grams, owing to the sharp rise in prices within a month.
Gold imports, which amounted to approximately 100 tonnes in February, experienced a drastic decline in March, with industry estimates suggesting only 25 tonnes were imported.
Jewellers are pinning their hopes on upcoming marriage demand and Akshaya Tritiya, falling in the first week of May, to boost sales. However, they remain cautious as gold prices continue to fluctuate. The movement of gold has been impacted by heightened vigilance during the election code of conduct.
Bhargava Vaidya, a bullion industry consultant, notes that while marriage demand in India remains steady or slightly increased in value terms, rising prices have led to a decline in demand in quantity terms. This trend is expected to persist at current price levels.
Surendra Mehta, national secretary of the Indian Bullion and Jewellers Association, acknowledges the current market scenario, stating that customers are refraining from purchases, with preferences shifting towards gold coins, bars, and other investment avenues.
With escalating prices affecting demand for jewellery, there is a growing inclination towards gold as an investment asset. Despite jewellery demand still dominating, sovereign gold bonds and exchange-traded funds have emerged as viable alternatives for investors.
Market insiders anticipate a potential return of customers if gold prices in the international market moderate to around $2,100. However, high prices are posing challenges for jewellers, impacting their inventory costs and prompting considerations for lower caratage jewellery options.
As the market witnesses a transformation in demand components, with gold reclaiming its status as a store of value, the upcoming Akshaya Tritiya is poised to be a critical juncture for jewellers, determining the trajectory of future demand.
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