“Indian consumers found a good opportunity to sell their used ornaments for cash in June quarter,” Somasundaram P R, managing director (India), WGC had said while unveiling Gold Demand Trend data for June quarter.
Since then, gold started moving up in the international market following estimates of US Fed’s interest rate cut, which weakened dollar but strengthened bullion. Analysts started forecasting robust safe-haven buying in gold amid fears of escalation in the ongoing trade war between the United States and China, and geo-political tensions in West Asia following global economic sanctions on Iran.
“There has been less consumer turnout for sale of used jewellery since July due primarily to hopes of further price increase. Used jewellery sales have declined by 50-60 per cent in six weeks starting July 1,” said Manoj Kumar Jha, Managing Director, Kamakhya Jewels, a Mumbai-based jewellery maker and retailer.
Echoing a similar response, Anantha Padmanaban, Chairman of All India Gems and Jewellery Domestic Council (GJC) and managing director of Chennai–based NAC Jewellers said, “Indian consumers sell old jewellery only when they need urgent cash. Most had already sold their allocated quantity in the June quarter. Hence, sale of scrap jewellery in July and August has been significantly lower. We estimate a sharp decline in used jewellery sales during September quarter.”
Farmers normally mortgage or sell their old jewellery with the onset of the monsoon to buy seeds and fertilisers, and recover ornaments after harvesting the crop. Since they had prepared to make purchases of seeds and fertiliser in the June quarter, their old jewellery sales were lower in July and August.
“With gold price hitting seven-year high in the international market and a life-time high in India, domestic consumers are waiting for an opportunity to make fresh purchases. Gold demand was weak the past few months. We estimate a rebound in jewellery demand during the ensuing festival season of Dussehra and Diwali. There will be less old gold jewellery sale now on,” said Rajendra Jain, managing director, Swarovski Gemstones, a jewellery maker and retailer.
Shaankar Sen, managing director of Kolkata-based Senco Gold estimates the need-based sale of old jewellery to continue with a recovery in demand of fresh ornaments in coming months.
“Indian consumers are habituated to see gold price at Rs 33,000 – 34,000 per 10 grams. With the current price prevailing at around Rs 38,000 per 10 grams, consumers are waiting for stability in gold prices
in India. From the level of 30-40 per cent of business as of now, the jewellery sale will become normal with stability in gold prices,” said Sen.