World Gold Council India MD Somasundaram PR said imports were much higher than demand over several quarters since Q1 of 2017, but July and August saw imports plunging 60%, reflecting the already weak trade sentiment
By Sukanya Mohapatra
The jewellery industry is looking at a dark Dhanteras and Diwali as the sector expects sales to decline at least 30% over last year in spite of the ongoing price corrections.
The industry’s only hope is in falling prices, which had scaled a record of `4,000 a gram last month, to get better footfalls. Currently, the metal is trading at around `3,800 to a gram.
In 2018, the industry managed to close with flat sales over 2017 Diwali season.
“Gold prices have soared to `40,000 per 10 gram last month, just in the beginning of the festival season and still remains high. This has further dampened the already weak consumer sentiment.
“But if prices continue to correct during this week there may be some improvement in retail demand. However, the overall business will still be 30 percent lower than last year,” All-India Gem & Jewellery Domestic Council chairman Anantha Padmanaban told PTI on Tuesday.
World Gold Council managing director for India Somasundaram PR said this Diwali is not going to be very shiny following very high prices and already poor consumer sentiment dented by the deepening all-round gloom in the economy with every key indicators contracting or plunging month after month for nearly a year.
“Buying is still happening at the very high-end, but bulk of purchases, that is the low-to-mid range, are affected badly. Looking at the current trend we may have to revise the overall 2019 demand target, which was earlier predicted at 750-850 tonne,” he said.
Somasundaram said imports were much higher than demand over several quarters since Q1 of 2017, but July and August saw imports plunging 60%, reflecting the already weak trade sentiment.
“Gold continues to be at a significant discount on account of muted demand and an active grey market, impacting organised manufacturers, refiners and jewellers,” he added. However, jewellery retailers are optimistic trying to attract consumers with offers and schemes.
According to Kalyan Jewellers chairman TS Kalyanaraman, “after steeply rising in July and August, impacting buying sentiments prices have steadied now, and we are hopeful that this Diwali will be good. Moreover, this is the start of the wedding season when big-ticket purchases take place.”
Sandeep Kulhalli of Titan said their flagship brand Tanishq has been witnessing substantial growth throughout the year so far and does not see why this should not continue during the festive season. “Higher bonuses to Central government employees will also help boost demand. Another enabling factor is the beginning of the wedding season when big-ticket purchases take place and we are already receiving positive response to our new Diwali collection,” he said.
On higher prices, Gnanasekar T of Comtrendz said the news on a US-China trade deal can strengthen the dollar further and keep gold prices under pressure. “But if the rupee depreciates further, more price correction is unlikely otherwise we see prices heading south to some extent,” he said.
Gold is ruling at around `38,000 per 10 gram now primarily due to lack of follow-through buying as safe-haven demand has dried up following the likelihood of a US-China trade deal, US Fed hinting at pause and a likely last minute Brexit deal, he said.