Jewellery sales up as gold price falls

Jewellery sales surged in the last fortnight as consumers sought to take advantage of a fall in the price of gold.

Gold price has declined by 7.5 per cent since demonetisation to trade at Rs 28,035 per 10 gm, near a 10-month low, on global cues and shrinking demand at home. 

Trade sources estimate jewellers have recovered around half the business lost after demonetisation. With the country’s cash flow easing and consumers switching to cashless transactions, the business is coming back on track.

“There has been a sharp rise in consumer turnout in the last two weeks,” said Mehul Choksi, chairman, Gitanjali Gems.

The jewellery business had come to a standstill after the November 8 demonetisation, but buyers in cities have started using cards and online fund transfers for jewellery purchases. “Around half the business is restored with fresh orders for wedding ornaments,” said Kumar Jain, director, Umedmal Tilokchand Zaveri, a bullion dealer and jewellery retailer in Zaveri Bazaar.

“It will take time to restore jewellery sales to their pre- demonetisation level,” he, however, added. 

Following a 1 per cent excise duty imposed in the Budget in February jewellers went on 42-day strike. Festival buying was also subdued after a normal monsoon season with the government announcing permanent account numbers would need to be disclosed for purchase of jewellery worth over Rs 2,00,000.  Gold prices also rose to around Rs 31,500 per 10gm on September 23. 

Bullion dealers imported around 100 tonnes of gold in November, the highest in a month this year, on rumours the government might ban bullion imports. According to trade sources, 70 per cent of these stocks are lying in bonded warehouses. This gold might come into the system once demand revived, said a bullion dealer.