India, the world’s largest consumer of gold jewellery, witnesses a big jump in gold buying around this time of the year due to festivals like Ugadi and Gudi Padwa, leading up to Akshaya Tritiya on 30 April. Hindus see buying the yellow metal on Akshaya Tritiya as a symbol of prosperity.
However, this year, gold prices have surged close to the psychological mark of ₹1 lakh per 10g. On 17 April, the spot prices soared to an all-time high of ₹97,310 per 10g for 24 carat and ₹89,200 per 10g for 22 carat over renewed geopolitical concerns and a weakening US dollar.
High gold prices often result in customers exchanging old gold instead of buying new to preserve wealth.
“Old gold exchange has gone up by 30-35% versus two years ago,” said Suvankar Sen, managing director and chief executive, Senco Gold Ltd, which operates 171 stores across the country.
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To be sure, the prices for 24-carat gold have rallied 23.84% over the past year and 38% over the past two years.
At Titan Co. Ltd-owned jewellery brand Tanishq, elevated gold prices resulted in sluggish consumer demand at lower price points, leading to single-digit buyer growth. In contrast, demand at higher price bands sustained, resulting in high double-digit growth in ticket sizes, it said in its March quarter update released last week.
The company, which operates 500 Tanishq stores across the country, reported 24% year-on-year growth in its domestic jewellery business due to a significant increase in gold prices. It has yet to announce its March quarter earnings.
Shares of Titan are down 5.76% on BSE since 18 April 2024.
Wary customers
Though customers remain wary, retailers continue to push offers ahead of the 30 April festival.
“We are bringing out new collections and lightweight jewellery made to fit into customers’ budgets. We are offering discounts on gold rates and making charges,” Sen added.
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Senco Gold is also offering 0% deduction on exchange, even for gold purchased from other jewellers.
Shares of Senco Gold are down 24% over the past year.
“This year, sentiment remains strong, while we see customers being more careful and planned in their purchases,” said Arun Narayan, vice-president, marketing and retail, Tanishq, Titan.
“Our approach, therefore, has been to respond with meaningful solutions like our Rivaah Golden Advantage purchase plan, Best Gold Rate, and our old-gold exchange programme that has mitigated the impact of rising gold rates,” he said.
Tanishq, too, has introduced a large collection of lightweight traditional and contemporary designs.
Consumers have become more discerning due to the upward movement in gold prices, agreed M.P. Ahammed, chairman, Malabar Group. “Auspicious days to buy gold, such as Gudi Padwa, Baisakhi, and Akshaya Tritiya, and the wedding season, have boosted consumer sentiment. As a result, walk-ins or footfalls to our stores have been healthy.”
Malabar Gold & Diamonds is offering customers up to 25% discount on the making charges, a flat 25% discount on the making charges of precious stones and uncut diamond jewellery, and up to 25% discount on the diamond value.
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“Our advanced booking facility is witnessing overwhelming response, as it allows customers to book jewellery with a minimum down payment of 10% of the total value and pay the rest based on the booked rate or the prevailing market rate—whichever is lower,” Ahammed added.
Such offers help cushion the impact of a future rally in gold prices.
However, the desire for exquisitely crafted jewellery will remain strong even though preferences and budgets for gold jewellery may evolve, said Sandeep Kohli, CEO, Indriya-Aditya Birla Jewellery, which operates 21 stores.
“We offer buyback policies and promotions. Our customer-owned gold exchange policy is very attractive, as under this policy, customers get 100% of the metal value,” he said.
Distress at the local level
Local jewellers said high prices are pushing more consumers to exchange or even sell their old gold. “People are exchanging gold, and some are even selling it because the price has gone too high, and they expect a fall in prices to buy again, which I feel is not very likely amid US President Donald Trump’s tariff hikes and other economic conditions,” said Sarthak Anand, director, Anami Jewellers, a store in Delhi’s Lajpat Nagar market.
Anand said more consumers returned to stores to remake fresh pieces from old gold, making up 30% of the store’s sales between March and mid-April versus a year ago.
Remaking accounts for about 10-12% of the store’s daily business. Consumers also sell old gold, with 15% of sales coming from there. The sale of new ornaments stands at about 55% currently versus 80% on average over the last two years when gold prices were lower.
