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Gold set to sparkle this ‘Diwali’; drop in price, pent-up demand to drive sales: Jewellers

Gold set to sparkle this ‘Diwali’; drop in price, pent-up demand to drive sales: Jewellers

30 Oct 2021

Mumbai: Finally, gold is set to regain its sparkle this Diwali as jewellers are expecting up to 30 per cent sales growth over the pre-Covid levels on the back of a faster-than-expected economic recovery along with lower prices and pent-up demand. The gems and jewellery industry witnessed a near washout during ‘Diwali’ and ‘Dhanteras’ 2020, following the Covid-19 related disruptions, including lockdowns and restrictions in movements across the country.

“We are witnessing a growth in momentum since ‘Shradh’, the third quarter of the calander year, usually considered a subdued month for the industry. However, the drop in gold prices to around Rs 42,500 per 10 grams level resulted in uptick in consumer demand,” All India Gem And Jewellery Domestic Council chairman Ashish Pethe told PTI.

He said the healthy Goods and Services Tax (GST) collection in the last few months indicates that economic recovery is on track and the weddings postponed due to the pandemic taking place this year end will boost gems and jewellery sales.

“Looking at the the positive consumer and market indications we expect 20-25 per cent growth in sales compared to 2019. We are witnessing this positive momentum from across the country,” Pethe added.

Gold price, which had touched a peak of Rs 56,000 level, on Saturday was ruling over Rs 49,200 per 10 grams level in the country.

Meanwhile, World Gold Council (WGC) Regional CEO, India, Somasundaram PR demand is primarily driven by what appears to be a firm grip on the pandemic with higher vaccination rates and falling infection rates, leading to a strong rebound in economic activity.

“While gold jewellery demand increased by 58 per cent to 96.2 tonnes, investment demand for bars and coins also grew by 18 per cent, in the July-September quarter that tends to be seasonally subdued due to monsoons and inauspicious periods like Pitru-Paksha when buyers stay away. Softer gold prices has also generated significant consumer interest ahead of seasonal demand,” he said quoting WGC’s Q3 Gold Demand Trends 2021 report.

Looking ahead with restrictions being gradually lifted across the country, retail demand is bouncing back to pre-Covid levels, he stated.

“With the upcoming festive and wedding season, there is all the more enthusiasm towards gold demand, and we anticipate it to be the busiest gold-buying season, since the start of Covid-19 pandemic,” he added.

PNG Jewellers Chairman and Managing Director Saurabh Gadgil stated that the market has been seeing strong demand since the start of Navratri.

“We expect to 25-30 per cent more business compared to 2019 and almost double than last Diwali, which was a near washout. People seem to have moved past Covid-19 and there is new enthusiasm and excitement among consumers. They are betting on a positive future and are making themselves happier by purchases like jewellery. Also, the wedding season is expected to continue for the next 3-4 months, which is a great boost to the industry and the positive effect of the same is likely to spill over through march next year if there is no impact of the third wave,” he added.

Malabar Gold & Diamonds Chairman Ahammed MP said the company expects healthy consumer demand for gold jewellery during Dhanteras this year due to pent-up demand.

“As the economic recovery is gaining pace, we expect a positive consumer sentiment during Diwali. We expect a 30-40 per cent increase in sales compared to that of last year during Diwali,” he added.

WHP Jewellers Director Aditya Pethe said the industry is very optimistic about the upcoming festive season and has very high expectations from the same.

“Since Dussehra we are seeing a good build up in sales. Slowly the clouds of the pandemic are fading and consumer confidence is recovering. We are expecting the pent-up demand to boost sales during Diwali and the upcoming wedding season. We are expecting a good uptake in demand and hope to achieve a growth of at least 35-40 per cent year-on-year. Look forward to good sales in the festive season,” he added.

Pooja Diamonds Director Shrey Mehta stated that the industry has high expectations from the season, including Dhanteras as the wedding season is just embarking and there is a lot of pent-up demand.

“We are expecting this enthusiasm to continue post Diwali and expect that this positive consumer sentiment will carry on till first half of next year,” he added.