Gold sales lose sheen this Diwali

Smartphones, consumer products turning out to be the first choice over gold and its related products

Hyderabad: This Diwali, it looks like gold has lost its sheen. For ‘Dhanteras’ – which marks the first day of the festival of lights in India, the seasonal demand for gold and its related products is usually high.

However, the demand for the precious metal was lack-lustre on Dhanteras on Monday, owing to several factors like lack of liquidity, rising gold prices and impending elections. Besides, rupee's depreciation pushed up local gold price which surged sharply to around Rs 32,000-33,000 per 10 gram, without taxes. 

In the Hyderabad market, jewellery retailers say sales are subdued this Diwali season compared to last year, as customers discouraged by high prices, resorted to just token purchases. Hindus consider purchasing gold on Dhanteras as auspicious. 

Praveen Kumar, Secretary, Twin Cities Jewellers Association, told The Hans India that gold sales were far lower than last year. “Sales are lower than last year, and demand is not really picking up as expected, so we don’t have huge expectations this Diwali.”

He went on to add: “India is in a passing phase where economy is having a financial crunch, banks don’t have the money to lend, and when they don’t lend then people cut down on jewellery purchases.”

Many jewellers in the city like Praveen Kumar who owns Sri Balaji Jewellers have shifted their focus into sale of light weight jewellery to tap the lower middle, middle class segment and the youngsters instead of the upper-class consumers, to sustain during this bad phase. 

“Retailers want to sell the current available stock in the store as their buying capacity is low. Overall market sentiment is affected by three factors. Rising prices of gold – lack of liquidity in the market – upcoming uncertainty over the elections,” said Mahender Kumar Tyagi, president, Hitech City Jewellery Manufacturers Association.

He added that the 14 per cent difference in international gold rate compared to Indian pricing needs to be reduced to boost the market. “A 10 per cent duty, 3 per cent GST and 1 per cent additional expense, is hitting the industry hard. The government should reduce the duty price for us to compete with the international market.”  

Further, Dhanteras and festival shopping in India is witnessing a shift from gold to electronic goods. Smartphones and consumer products are turning out to be the first choice ahead of gold and its related products, the retailers feel.