Slump expected in Indian gold jewelry demand

June 4, 2015 11:22 AM

The Indian Bullion and Jewelers Association (IBJA) has predicted significant drop in the country’s wedding jewelery gold demand during the second half of the year. This is on account of lesser number of auspicious days as per Hindu calendar. According to retailers and gold traders, the number of wedding days is almost 40% less during H2 2015 when compared with the corresponding second half of 2014.

According to IBJA spokesperson, the considerably lesser number of wedding days during the second half of 2015 will dent the demand for gold jewelry. Further drop in gold prices is expected to compensate for the drop in wedding days, as people may still prefer to buy gold at cheaper rates. According to IBJA, gold prices in the range of Rs 25,000 per 10 grams will restrict the demand drop to 10%-15%. However, if gold prices continue to hover around Rs 27,000 per 10 grams, gold jewelry sales is expected to drop significantly by nearly 25%.

The Indian gold trade was in anticipation of increased jewelry sales, as first quarter of the year had reported robust demand growth. The quarterly ‘Demand Trends Report’ released by the World Gold Council (WGC) had indicated 15% rise in the country’s gold demand during January to March this year. The Indian gold demand during the first quarter had totaled 191.7 tons when matched with 167.1 tons demand reported during the corresponding quarter in 2014. The report had stated that the growth in demand was mainly driven by surge in gold jewelry sales.

However, Bachhraj Bamalwa, director, All India Gem & Jewelry Trade Federation (GJF) stated that lesser number of wedding days are less likely to impact gold jewelry sales. According to him, marriages generally are not postponed, once they are fixed. In all likelihood, more number of marriages may take place on the same day. However, in line with the current market trend, gold jewelry sales are expected to remain muted during the rest of the year.

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