On the contrary, demand for diamond and coloured gemstone jewellery that requires stronger and more affordable 14 to 18 carat gold – and not 22-carat gold used for pure gold jewellery – has picked up, they said.
“Reports from jewellers in different parts of the country show that there has been a drop of 25% in demand since the prices crossed ₹63,500 per 10 gm,” said Surendra Mehta, national secretary of India Bullion & Jewellers Association.”Demand will only pick up if the gold prices fall to ₹61,000 per 10 gm,” he added.
The current surge in gold prices has been propelled by the US Federal Reserve’s dovish stance on benchmark interest rates. The Fed maintained status quo on rates at its December meeting but signalled a possible 75 basis points rate cuts in 2024, up from its previous projection of 50 basis points.
This triggered a substantial drop in US treasury yields and the US dollar, propelling gold above $2,000 an ounce.Some jewellers said they are now pushing studded jewellery where the margins are up to 3x higher than plain gold jewellery.”Volume-wise gold has fallen, but value-wise the sales remain robust,” said Ramesh Kalyanaraman, executive director at Kalyan Jewellers. “For instance, if someone was buying 100 gm of gold, then he is buying 95 gm of gold. But there is a constant interest among the young crowd for studded jewellery. For many wedding rituals in the run up to the actual marriage, people are buying studded jewellery,” he said.
In the price-sensitive eastern market, jewellers are witnessing a surge in demand for studded jewellery for the upcoming wedding season. “Volume-wise, there is a drop of 7-8% in gold jewellery,” said Sanjay Banka, chief financial officer of Senco Gold & Diamonds. “People prefer lightweight jewellery. But the demand for diamond studded jewellery is on the rise,” he added.