Hopes dashed: Jewellers fret over lacklustre Dhanteras sales

Rutam Vora Ahmedabad | Updated on October 26, 2019

Increased trend towards exchange of old to new jewellery as buyers prefer spending less on bullion

Persistently high prices, coupled with prevailing economic uncertainty, dashed hopes of jewellers and bullion traders, who had pinned their hopes on Dhanteras sales ahead of Diwali.

Bullion streets across Mumbai, Ahmedabad and Rajkot showed no sign of enthusiasm among shoppers.

The sales during the day came down to 45 per cent in different markets when compared with last year's Diwali sales.

After starting the week at ₹38,315 for 10g (PM rates for 999 fine gold) as quoted by the India Bullion and Jewellers Association (IBJA), gold prices continued their upward journey throughout the week to touch a high of ₹38,725 on Friday.

“Dhanteras is an auspicious time for gold purchases. But the actual sales reveal the real mood. Sales are down by about 40 per cent this Diwali. The buying is very thin and most purchases are restricted to smaller coins and light jewellery,” said Shantibhai Patel, chairman of Gems and Jewellery Trade Council in Ahmedabad.

Jewellers also observed an increasing trend in jewellery exchange — where a customer brings his old jewellery, liquidates the same and, in exchange, purchases a new piece of jewellery. This, however, isn't seen as a beneficial proposition for the jewellers, who see only the marginal gain on making charges and a small rise in sales.

Rising trend in exchange

“Mumbai market is not having the charm we usually see on Dhanteras. The rates have gone up by about 26 per cent over last year. This has dented the jewellery and coin sales by up to 65 per cent. Not just the ticket size of the buyers has reduced, even the number of buyers has gone down sharply,” said Suresh Hundia of Hundia Exports in Mumbai.

“Interestingly, the trend for jewellery exchange has increased by about 30 per cent compared to last year. This indicates that people are hesitant to make new jewellery. They just go for exchange to mark the auspicious occasion,” added Hundia, who was a former President of Bombay Bullion Association. (BBA).

Gold prices in spot had hit a peak of ₹39,188 (999 fine gold) on September 4, 2019. But in retail markets in other pockets, prices had briefly touched ₹40,000, including in Ahmedabad and Rajkot.

Bullion experts see international factors influencing the price of the yellow metal. The uncertainty around Brexit and the prolonged stand-off between the US and China over trade issues have fuelled international sentiment for gold as a safe-haven. CME Gold futures quoted at $1,501 an oz for October expiry. The prices have remained volatile in the past two months — from a peak of $1,550 to a recent low of $1,480.

Silver, the preferred choice

Meanwhile, for the auspicious buying, silver remained on top of shoppers’ preference. “If it is just for an auspicious occasion, the buyers preferred buying silver coins over gold due to the price factor,” stated an Ahmedabad-based jeweller.

Silver prices in spot quoted at ₹46,777 for a kg, which is also on a higher side in the past few days. Silver had flirted with ₹50,000 mark around first week of September, but couldn’t sustain at higher level and corrected from the peak to hit a recent lows of ₹44,330 a kg.

Published on October 26, 2019

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