New Delhi: Pushpa Bhatia is in a dilemma as she scans the glittering gold offerings laid out on a showcase at a fancy jewellery store in New Delhi.
With the precious metal’s price on a roller-coaster ride, she’s wondering whether she should buy now or wait.
“Will the price go up or down, you tell me,” Bhatia says to the salesman, who responds with a shrug.
Last week, gold posted its biggest weekly gain in a decade, climbing 13% to $864.70 (Rs40,035) an ounce, as the credit turmoil pushed investors into safe haven assets.
But Bhatia can’t wait too long — India’s marriage and festival seasons are approaching and she needs gold for both. She has a 23-year-old daughter getting married in November and she likes to give small “auspicious” golden gifts for the Hindu calendar’s biggest holiday next, Diwali.
India is the top gold consumer, importing 700-800 tonnes a year — around 30% of global demand. Higher prices won’t stop Indians buying, said Suresh Hundia, head of the Bombay Bullion Association. “Those who have marriage commitments will buy — no matter what the rates.”
With around 10 million marriages a year in India, wedding-related demand is huge, especially during the nuptial season between October and January and April and May.
“The idea of giving gold to the bride is it will bail her and her family out in times of crisis,” said Ajay Mitra, managing director of the World Gold Council in India.
“Most of the time, the customers don’t even look at the design — they just look at the weight,” said jewellery store salesman Devender Kumar.
However, lifestyles are changing in urban areas.
Bhatia’s daughter, Supriya, a newly minted accountant in tight trousers and an applique T-shirt, says she’s bored with the metal. “It’s too heavy to put on,” she says, screwing her face in disgust at an elaborate chain the salesman is looping around her mother’s neck.
The vast array of consumer goods and trendy accessory jewellery to be found in cities have made gold a less sought-after item for many.
“For thousands of years, women had very little personal wealth other than their jewellery — they didn’t have bank accounts,” said Arvind Singhal, head of retail consulting firm Technopak. “But now, with the empowerment of women in urban areas, they want to spend their disposable income on cars, TVs, holidays, a new handbag.”
Still, Supriya Bhatia knows she won’t win the battle over her wedding jewellery as her mother orders her to sit and pay attention. “It’s a necessity to own gold if you’re a woman,” said her mother firmly.
And even though urban tastes are changing, the overall gold consumption is unlikely to alter, analysts say.
There is “a growing trend toward luxury goods rather than wanting to buy gold in urban areas”, noted Suki Cooper, analyst at London’s Barclays Capital. But, she said, “The majority of gold consumption is in rural areas”, where “that level of consumerism doesn’t exist so India is likely to stay a very important gold consuming nation”.