Steep prices may dampen gold sales this Dhanteras

Hyderabad: With market sentiment remaining muted thanks to high prices, gold seems to have lost its sheen ahead of upcoming Dhanteras which falls on October 25.

Demand for gold normally peaks on Dhanteras, the first day of the festival of light, Deepawali, as many consider purchasing gold on this day brings prosperity.

But gold jewellery manufacturers fear that sales may drop 30-40 per cent this time compared to last year's as gold prices are hovering at all time high now.

Furthermore, gold retailers say the sales decline will be much higher, up to 75 per cent year-on-year. However, they see a ray of hope in light weight diamond jewellery demand for which is on the rise.

"We are experiencing 30-40 per cent lower demand for jewellery from retailers due to rise in gold price and increase in gold import duty from 10 per cent to 12.5 per cent.

The import duty has demotivated NRIs from making a purchase in India, as the market is faring comparatively well in the US, UK and Australia," Mahender Kumar Tayal, president, Hitech City Jewellery Manufacturers Association, told The Hans India.

During last year's Deepawali season, the price of 22 carat gold was around Rs 30,000 per 10 gram while 24 carat gold was available at over Rs 32,000 per 10 gram.

Gold prices have skyrocketed in the last one year, reaching a historic high of over Rs 40,000 (for 24k) towards September end this year. On Wednesday in Hyderabad, 24 carat gold was quoting at Rs 39,650 while 22 carat variety was priced at Rs 36,470 per 10 gm.

However, Tayal said the consumer sentiment in Hyderabad has improved a bit in last two weeks. "With the slight correction in gold prices, customers are evincing interest to buy some amount of gold as Dhanteras is considered to be auspicious," he added.

Darpan Gupta Mangatrai, a partner of 113-year-old Mangatrai Jewellers, says that there is more demand for diamond and precious stones this year.

"Compared to last Dhanteras, there isn't any increase in sales, but we expect the sales to be stable this time amid an overall negative market sentiment," he explains.

According to jewellery retailers, customers are deferring purchase with an expectation of further price correction by up to 5-10 per cent.

"In the next 15 days, the sales might revive with the settling down of US-China trade tension and Brexit too. At present, sales are around 25 per cent of what was recorded last year," said Praveen Kumar, Secretary, Twin Cities Jewellery Association.