Gudi Padwa, Sachin Jain, World Gold Council: The surge in gold prices, peaking at Rs 71,000 per 10 grams on MCX in India and surpassing $2350 internationally, has resulted in significant repercussions. Reports from jewellery retailers indicate a near cessation of jewellery demand in both rural and urban areas during the first quarter. However, there is optimism as the current festive season, encompassing Gudi Padwa, Ugadi, Chaitra Navratri, and Ramzan Eid in April, is expected to stimulate consumer purchases and bolster gold demand. Recent industry observations suggest an uptick in consumer interest and substantial pre-festival bookings, signaling a potential resurgence in demand.
Sachin Jain, Regional CEO for India at the World Gold Council said, ‘Gold has touched historic high prices of Rs 71,000 per 10 grams in India resulting in near stagnant jewellery demand in first quarter in both rural and urban centres as per anecdotal feedback from the jewellery retailers.’
Jain emphasizes the enduring cultural affinity of Indian households towards gold, deeply rooted in both tradition and economic prudence, particularly during auspicious festivals.
According to Jain ”Over the years, the Indian households have created a strong cultural bond, underpinned by strong economic wisdom, between gold and auspicious festivals so much so the positivity around these festivals are enhanced by a token purchase of gold. Hence, the start of current festive season with Gudi Padwa, Ugadi, Chaitra Navratri and Ramzan Eid falling in April, it should see an uptick in consumer purchases and drive the gold demand upwards. Past few days, industry has been reporting increased consumer interest and good prior bookings for festivals.’
However, Jain cautions that heightened scrutiny on gold and cash movements during the upcoming general election period may suppress demand outside of festivals for the next two months.
He said ”Also, during the general election period for next two months, there will be heightened scrutiny on the movement of gold and cash. Except during festivals, gold jewellery demand will likely remain subdued during large part of Q2, even if prices moderate over the coming months. On the flip side, higher prices could encourage investment into gold-linked digital and investment products.”