Mumbai: India’s gold merchants are expecting a sustained pick-up in sales for the second round of festivals, as a reviving economy and stable prices may aid sentiment, triggering a reversal in declining trend in imports.
“People have started buying from July for the upcoming weddings, actually they all had money but unwilling to spend it due to recession, now they have started buying,” said Justin Varkey, chief executive officer with Jaipur-based Jewel Ace, which sold Rs2.5 crore worth of jewellery last year.
India is currently hosting Asia’s second largest gems and jewellery exhibition in Mumbai, displaying gold ornaments from 700 domestic jewellers and 200 overseas makers.
The five-day fair, which ends on Monday, is considered an indicator of order-book demand ahead of the August to November festival and wedding season, when gold buying tends to spike.
Gold imports in 2009 fell to its lowest level in more than a decade as the worst monsoon in nearly four decades and fears of recession overseas dented sales.
“There could be a rise of over 10% in imports this year as even monsoon are good, industrial activity is picking up along with employment,” said Nayan Pansare, an analyst who advises the jewellery industry.
Demand for gold in top consumer India hinges on a good monsoon, which boosts farm output and rural incomes. The crucial monsoon rains are likely to be above normal in the remaining two months of the June-September season.
“We have seen a growth in sales this year and are gung-ho for the season. We expect a rise of 50% in sales,” said Ariez Tata, director with Mumbai-based retailer Cogent Jewellery.
Gold imports in India, the biggest consumer, rose 18.9% to 155.6 tonnes in the first six months to June, and jewellers say there could be a reversal in trend this year given the positive feedback from consumers.
Prices have fallen more than 2% from their all-time high of Rs19,198 per 10 grams struck in early June, when investors overseas sought a safe-haven instrument amid the economic turmoil in the European Union. Prices have been in the range of Rs17,500-18,750 for most part of the year. “It’s going to a cautious year after the recession last year,” said Pansare.
Industry participants say jewellery exports to the US would see a rise compared to other traditional markets like Japan and the European Union.
“Order production has already begun for the US for Thanksgiving (day) and Chirstmas. We see a rise of 4-5% in sales this year,” said Pansare, of Yash Jewellery, which exported $100 million worth of jewellery last year.
India, which exported $28.41 billion worth of gems and jewellery last year to March 2010, shipped more than 60% to the US, its largest market.
“In all, we feel that there could be a rise over 10% in gems and jewellery exports and especially over 10% from the US as the economy is coming out of recession,” said Vasant Mehta, chairman of Gems and Jewellery Export Promotion Council.
The October gold contract was trading at Rs18,739 per 10 grams at 11:23 am.