A weak monsoon may not only bode well for India’s farmlands but also for gold jewellers across the country as decline in rural income would mean a direct impact on jewellery sales.
The festival and wedding season, which is due to commence later this month, may continue to see subdued sales of gold jewellery.
“Gold sales have been poor for the last two months. I would say that demand is down by half,” said Dinesh Jain, Managing Director, P.M. Jewellers. Household budgets have been strained by high inflation. Additionally, money from realty sales, one main source of funds, has also dried up, said Jain.
Also, the four-month South West Monsoon has been weak especially in parts of Maharashtra, Gujarat and Rajasthan and could impact agricultural production. A fall in rural incomes would have a direct impact on plain gold jewellery sales. Plain gold jewellery demand is often quite strong in rural areas of the country and across the four southern States.
Jewellers are resorting to introducing different kinds of products to keep the consumer interest alive. Light weight jewellery, products set in 18-carat gold, products set in low-quality diamonds, are some options that jewellers are looking at in recent weeks, said Jain.
Consumers are also stepping up recycling of old gold jewellery. “Today about 40-45 per cent of business comes from recycling jewellery; earlier it was around 20-30 per cent,” said Jain.
Traditionally, rural demand for gold jewellery is down during the months of July and August as the focus is on agriculture.
“But the upcoming season is likely to be slow this time around,” said Akshay Bardia, Director, Raipur-based A.T. Plus Jewellers, . According to him, a clear picture on the demand scenario will emerge in 15-20 days’ time.
“If prices go up from these levels, demand is likely to decline further,” Bardia said.
Gold prices continue to hover around Rs 29,700-30,000 for 10 gram in spot markets of the country.
In the South, gold demand has not been as badly impacted as in the West, jewellers said.
“Domestic demand is down to the extent of 10-15 per cent. But our exports and domestic business have been doing well,” said Rajesh Mehta, Chairman, Rajesh Exports Ltd.
While demand for the normal gold jewellery has been weak, Chennai-based Jai Gulab Dev Jewellers have been seeing consistent demand as it focuses mainly on antique jewellery.
“We are specialists in antique jewellery. Overall, the response has not been so bad for us,” said Vikas Jain of Jai Gulab Dev Jewellers.