The price of gold
is near a four-week low but jewellery consumers haven’t been making new purchases.
Any buying of gold
jewellery over Rs 50,000 now requires a jeweller to register Know-Your-Customer details under a recent extension of the Prevention of Money Laundering Act (PMLA). This is one reason.
“After the inauspicious pitripaksha fortnight, we have seen an increase in consumer footfall. However, new jewellery demand has been negligible. Most orders are for replacement or scheme-related, not healthy sign for jewellers,” said Kumar Jain, Director, Umedmal Tilokichand Zaveri, a bullion dealer and jewellery retailer at Zaveri Bazaar here.
The reference to schemes is to the incentives most jewellers had introduced to encourage purchases. For instance, many have begun one under which the jeweller deposits 75 per cent of the first month’s payment after an investor deposits a fixed amount for nine continuous months.
Others offer one from the jeweller after a year of making deposits.
The global price fell this week to $1,287 an ounce, the lowest in a month, after the US Federal Reserve affirmed a scheduled upward revision in its policy rate this December. Gold
was $1,294 an oz a month before, on tension between North Korea and America. However, depreciation in the rupee had restricted the benefit to Indian consumers. Standard gold
here hit a high of Rs 30,180 per 10 g on September 15; it is now Rs 29,625 per 10 g.
“Consumer sentiment is very weak. The jewellery business has had major blows in the past year. There was demonetisation last November. Then, goods and services tax of three per cent on jewellery. And, five per cent on job work in July, followed by the PMLA extension. All these hammers are keys to lock the jewellery business,” said Nitin Khandelwal, chairman, All India Gems and Jewellery Trade Federation.
He added that bullion dealers had imported enough gold
in the first five months to feed the jewellery industry for the rest of the year.