New Delhi
Gold-buying trends in India could change during this year’s festive and wedding season. A nearly 39% surge in gold prices, combined with Prime Minister Narendra Modi’s appeal to buy gold only when necessary, is expected to put pressure on the market.
Gold purchases typically increase significantly during festivals in India. However, prices approaching record levels are putting pressure on household budgets. At the same time, Prime Minister Narendra Modi’s recent appeal could also influence consumer sentiment.
PM Modi’s Appeal Could Affect Sales
On September 1, Prime Minister Narendra Modi appealed to citizens to buy gold only when necessary. The appeal is considered significant at a time when gold prices have been rising sharply.
According to a report by The Economic Times, Surendra Mehta, National Secretary of the India Bullion and Jewellers Association (IBJA), said that Prime Minister Narendra Modi is a major influencer and his appeal could affect consumer sentiment.
He estimated that gold sales could decline by around 10% to 12% during the festive season following the Prime Minister’s appeal.
Gold Becomes 39% More Expensive, Increasing the Burden on Buyers
Gold prices have risen by approximately 39% over the past year, affecting the purchasing power of consumers. Families buying gold for weddings and festivals now have to spend significantly more than they did previously.
Such a sharp rise in prices could encourage customers to choose lighter-weight jewellery instead of heavy ornaments or postpone their purchases for some time.
This could directly affect jewellery businesses, particularly small and local jewellers.
Small Jewellers Could Face Greater Challenges
Compared with large branded jewellery stores, small jewellers tend to depend more heavily on local customers and wedding-related purchases. If consumers reduce their gold purchases, smaller businesses could face increased pressure on sales and cash flow.
To attract customers, jewellers may need to offer options such as lightweight designs, low-weight jewellery and discounts on making charges.
PM Modi Had Also Appealed to Buy Less Gold in May
Prime Minister Narendra Modi had earlier appealed to Indians in May to reduce their gold purchases. At the time, he cited the ongoing conflict in West Asia and concerns related to the country’s foreign exchange expenditure while urging people to buy less gold.
With a similar appeal being made again ahead of the festive season, discussions have intensified over its potential impact on the gold market.
Focus on Dhanteras and the Wedding Season
In India, buying gold during Dhanteras and Diwali is considered auspicious. The October-November wedding season is also extremely important for the jewellery industry.
Jewellers will therefore be closely watching sales during Dhanteras this year. If high prices and weaker consumer sentiment result in a 10-12% decline in sales, the impact could be relatively greater on smaller businesses.
Will Customers Completely Stay Away From Gold?
According to experts, India’s cultural and investment-related demand for gold may remain strong despite high prices. Many people consider buying gold important for occasions such as festivals and weddings.
However, the sharp rise in prices could change consumer behaviour. Buyers may purchase smaller quantities, prefer lightweight jewellery or postpone their purchases.
As a result, this festive season could see an interesting battle between high gold prices and India’s traditional demand for the precious metal.
