Jewellers expecting biz to shine this Dhanteras

Mumbai: With the Dhanteras around the corner, the jewellery industry is cautiously optimistic about the demand, mainly due to the exceptionally high base last year, inflation worries and the overall rising cost of living.

The industry is cautious despite benign gold prices, which are ruling at around Rs 47,000-49,000 per 10 grams, and overall positive consumer sentiment. After the first wave of the pandemic, revenge purchases along with postponed weddings boosted demand, resulting in an exceptionally good Dhanteras in 2021, with sales crossing even the pre-pandemic levels.

Dhanteras, which marks the first day of Diwali in India, is considered auspicious to buy gold and silver as part of Hindu festivities. "The demand for jewellery during Dhanteras is likely to be at par with last year as 2021 was an exceptional year for the industry when the country slowly inched towards normalcy after the pandemic. "Postponed weddings and revenge purchases last year boosted demand with sales crossing the pre-pandemic levels," All India Gem and Jewellery Domestic Council chairman Ashish Pethe said.

This year, the consumer sentiment is dampened following high inflation, rising costs and unseasonal rains affecting agriculture activities, he said. "Even the pre-booking of jewellery, which usually begins during Dussehra, is very slow this year. However, the weak gold price is likely to favour the sector," he added.

World Gold Council Regional CEO, India, Somasundaram PR said that over the years, India has developed a strong cultural bond between gold and auspicious festivals, such as Dhanteras, supported by sound economic reasoning. "The purchase of gold as a token boosts the positivity surrounding these festivals. Moreover, with recent corrections in local gold prices and a favourable monsoon, festive sentiment among retail consumers appears to be positive," he pointed out. However, the impact of inflation on household finances may lead to an immediate impact on gold jewellery demand, he cautioned. "Unlike the Diwali season of 2021, this season may not have the advantage of pent-up demand or savings from muted wedding celebrations, fuelling higher gold purchases. Having said that, this is a busy buying season, and with gold being a valuable hedge against inflation, any further price declines in the coming weeks could result in a surge in demand," he added.

Senco Gold and Diamonds managing director and CEO Suvankar Sen opined that this year the industry is likely to witness a standardised demand as things have gone back to normal after an exceptional 2021, where the sales were mainly driven by revenge purchases after the country gradually came out of the disruptions caused by Covid-19. "We expect the growth in sales will be either in high single-digit or low double-digit compared to last year, but the ticket size will be low, which will be compensated by higher footfalls," he said. Weak prices may not have much impact on sales as the weak rupee has restricted further fall of the gold price, he said. "This year, the sales might get a boost as Dhanteras falls on a weekend and is spread over two days. After a good first quarter and a muted second quarter, the industry is looking forward to a positive third and fourth," he added.

Unlike the Diwali season of 2021, this season may not have the advantage of pent-up demand or savings from muted wedding celebrations, fuelling higher gold purchases. Having said that, this is a busy buying season, and with gold being a valuable hedge against inflation, any further price declines in the coming weeks could result in a surge in demand

- Somasundaram PR, Regional CEO (India), World Gold Council