Even after a more than 10% correction in domestic gold prices, the bullion industry is divided over the impact on purchases in the upcoming wedding season.
A section of the industry believes that if prices remain below R30,000 per 10 gm, there could be a resurgence in demand thats typical of the season. Others, however, believe that the price volatility and economic slowdown would force buyers to make budgeted purchases.
Prices are close to the comfort zone of many buyers. Even if they stay 15-20% below their peak, demand for jewellery is likely to improve, given that for the first time in three months, inquiries went up recently, said an industry insider.
During the last one week, spot prices in Mumbai for 22-carat gold were in the range of R29,000-29,600. The standard price touched an all-time high of R33,265 in late August, as per Capitaline. Industry players say while inquiries have gone up, purchases are expected to pick up after two weeks once the Shraadh period gets over. Generally, demand tends to compound in the last quarter of the year due to festivals like Navratri and Diwali. Industry is also optimistic that wedding-related buying may remain healthy on the back of a relatively longer season this year as per the Hindu calender.
For the first time in nearly a decade, we are expecting the longest wedding season extending from Diwali to mid-2014 barring some inauspicious days. The demand is likely to get a boost because of this, said Prem Hinduja, CEO, Tribhovandas Bhimji Zaveri. According to Hinduja, if prices stay near the current levels, the wedding-linked buying may sustain even though customers may stick to strict budgets.