FILE PHOTO: Women buy gold ornaments at a shop in Amritsar
trading at a nearly two-month low, jewellery demand
has jumped 20 per cent in the past couple of days, ahead of an expected goods and services tax (GST) hike. There is speculation that GST
may be increased from 3 per cent to 5 per cent following the GST
Council meeting on December 18.
prices have declined 3.6 per cent since its peak of Rs 39,031/10g on September 4, taking cue from global prices. Standard gold on Tuesday traded at Rs 37,615/10g, the lowest in the past two months; it recovered marginally thereafter to close on Wednesday at Rs 37,641/10g and at Rs 37,778/10g on Thursday.
Gold prices in the benchmark London spot market had declined 5.7 per cent, after hitting the recent peak of $1553/oz on September 4, to trade on Tuesday at $1,464/oz. However, since then gold prices in London have recovered marginally to $1,480/oz levels.
“The decline in the gold price has revived jewellery demand
sentiment in India. Besides consumer footfall, jewellery sales have increased in the last two days by at least 20 per cent,” said Anantha Padmanabhan, managing director, NAC Jewellers, a Chennai-based jewellery retailer, and chairman of All India Gems and Jewellery Domestic Council (GJC).
India’s jewellery demand
has remained subdued this year because of the sharp increase in gold prices. Since July, when gold prices started shooting up, consumers were in the wait-and-watch mode. Gold prices had jumped by nearly 20 per cent between May-end and September.
“With record weddings scheduled this year, consumers are booking their jewellery for weddings, festivals like the Christmas and New Year. We have seen a sharp increase in jewellery demand in the last few days,” said Kumar Jain, director, Umedmal Tilokchand Zaveri, jewellery retailer in the popular Zaveri Bazaar in Mumbai. The data compiled by the World Gold Council (WGC) showed a 32 per cent decline in India’s jewellery demand at 101.6 tonnes for July–September 2019, against 148.8 tonnes for the corresponding quarter last year.
Overall jewellery demand, according to the WGC data, declined 5.3 per cent to 395.6 tonnes for January–September 2019, against 417.9 tonnes reported for the same period last year.
“Bullion prices were seen trading a tad lower after testing this week’s high in the previous session. Both gold and silver prices on the London platform have seen moderate losses, while the bullion on the Multi Commodity Exchange platform was oscillating between gains and losses. However, investors continue to hold a discreet stance ahead of the US tariff deadline this weekend,” said a report from Geojit Financial Services.
“With more correction in gold prices, India’s jewellery demand will rise further,” said Padmanabhan. Meanwhile, the sudden increase in jewellery demand can also be attributed to market speculation of an increase in the GST
rate from the existing 3 per cent to 5 per cent in the GST Council meeting scheduled for December 18. Surendra Mehta, national secretary of the India Bullion and Jewellers Association dubbed the proposed GST hike “disastrous”.
The Centre raised import duty on gold to 12.5 per cent in the Budget 2019, from the earlier 10 per cent. Thus, the overall tax incidence works out to 15.5 per cent; an average 10 per cent making charge on jewellery is levied by jewellers.