Festival Season Gold Rush Fizzles as Prices Soar

The Indian bullion industry expected a profitable festival season due to a cut in import duty. However, a rebound in gold prices diminished demand, leading to an anticipated 20% drop in sales volume. Consumers are buying lighter jewelry as prices have surged, impacting traditional buying patterns.

The Indian bullion industry's high hopes for a prosperous festival season have been subdued by a surge in gold prices reaching a record high. This comes after a significant cut in import duty, the lowest in a decade, raised expectations for strong sales.

'Everyone felt positive post-duty cut,' remarked Prithviraj Kothari, president of the India Bullion and Jewellers Association. However, with prices ascending again, potential buyers are deterred, potentially slashing demand by 20% in volume. The festive season, vital for gold sales in India, may not meet previous expectations.

Many consumers now prefer purchasing lighter, budget-friendly jewelry as prices have escalated over 25% since last year, says Amit Modak, CEO of PN Gadgil and Sons. Despite an initial surge in demand following the import duty reduction, the rising global market prices have cooled expectations, with dealers reducing premiums to boost sluggish sales.

(With inputs from agencies.)