Jewellers expect sales to peak this festival season
Lower prices, revival in economy and easing of Covid restrictions favour brisk sales
Jewellers can expect exceptional sales this festive season as two factors look pretty much favourable. First, gold prices have retreated from high levels. Second, there are signs of the economy recovering faster than expected amid falling numbers of Covid-19 patients and the accelerated pace of vaccination.
According to a Business Standard report, the All-India Gem and Jewellery Domestic Council expect 15% higher than in the same period two years ago as pent-up demand and lower prices could boost last-quarter gold sales.
Price factor
Gold prices “have mellowed down and are favourable and weddings are also very high in number,” All-India Gem and Jewellery Domestic Council chairman Ashish Pethe was quoted as saying in the report.
Last year, global prices had soared in the wake of stimulus measures undertaken by central banks during the pandemic. Investor demand for gold since then has waned after the Federal Reserve hinted at scaling down asset purchases.
Gold prices have since then declined 17% in the local markets from their record high recorded last August amid diminishing status of gold’s safe-haven status.
Pent-up demand
Quoting Suki Cooper, an analyst at Standard Chartered, the Business Standard report said India’s bullion imports have surged and pent-up demand has been high as the market enters its peak buying period.
Retail demand was weak during the pandemic as shoppers postponed their purchase plans. Covid restrictions and high prices had also dampened the festival spirit.
Jewellers report brisk sales during the festival period that coincides with the wedding season.
As per a survey, about 28% of Indians living in major cities are planning to spend on gold in the next three months, highlighting a renewed appetite for the yellow metal due to the waning effects of the second wave of Covid-19. With state governments slowly easing restrictions on movements, businesses, especially organised retailers are hoping consumers will show positive sentiment during the festive season this year. It also noted that the gems and jewellery industry was badly affected by the Covid-induced disruptions in 2020 and had shown signs of recovery in January-March this year. But the second wave put a halt to it.