Falling gold price boosts demand for jewellery

Ahmedabad: Falling gold price after the basic customs duty (BCD) cut on gold and silver has left jewellers rejoicing as the business has begun to bounce back significantly with jewellery demand going up. Jewellers said that fresh gold purchases have begun taking place for weddings as well as routine purchases, thanks to the decline in the yellow metal price.

“Gold jewellery demand has grown since Uttarayan and with each passing day, as prices went down, the demand only improved. As the government relaxed norms by increasing the cap on the number of guests allowed at weddings to 200, several weddings which had been deferred due to the pandemic are now taking place. This boost the confidence among gold jewellery buyers and as a consequence, gold demand has gone up,” said Jigar Soni, president, Jewellers’ Association of Ahmedabad (JAA).

Jewellers said that reduction in gold price below the Rs 50,000-mark had a psychological impact on gold buyers, and thus, it fuelled purchases too.
The price of gold plunged to Rs 46,300 per10 gram on Monday, falling by Rs 200 against Saturday’s Rs 46,500 per 10 gram. This means yellow metal price has declined 13% from its peak price of Rs 54,300 per 10 gram on January 6, this year.

The revival in gold demand is clearly evident with 3.78 metric tonnes of gold import in Gujarat in February 2021.

Analysts attribute the steep decline in gold price to the cut in BCD on gold imports from 12.5% to 7.5%. That apart, global factors coupled with good returns in the Indian equity markets caused gold prices to decline significantly.

Jewellers claim that along side buyers from urban areas even that in rural areas has improved. “The demand for both gold as well as silver in terms of bullion and jewellery has gone up significantly. In the run up to the wedding season next month, people are confidently making purchases,” said Manoj Soni, a city-based jeweller.

Image Courtesy: Economic Times

News Courtesy: TOI