New Delhi: Indian retailers are hoping that volatile stock markets will drive demand for gold coins, medallions and bars rather than just jewellery during the peak festival season in the world’s largest market for the precious metal.
Though international gold prices have fallen below $800 (Rs39,840) an ounce, the price level that triggered a buying scramble in August, consumers are buying only as much jewellery as they feel is needed for festivals and marriages.
“People are waiting for prices to fall still further,” said Pawan Choksi, an Ahmedabad-based bullion dealer. “Lots of investors have changed their preference from buying jewellery to gold coins.”
The World Gold Council recently estimated the size of India’s gold coin market at about Rs10,000 crore.
Popley Jewellers, a prominent domestic jewellery chain, said it launched gold coins for the first time during the festival season. “The bullion part of our business has certainly picked up, and we are hopeful the jewellery part will also soon pick up,” said Rajiv Popley, director of the Popley group.
“Our bullion sales have increased by 35% over last year in terms of weight,” he said, without disclosing specific figures.
Many companies bought small gold coins as gifts during Diwali when the gold price fell to around $700 last week, Popley said.
Diwali, which was celebrated on Tuesday, is considered the most important Hindu festival among a string of others that begin in September, when it is considered auspicious to buy gold. Traditionally, gold buying slows after the festival, but continues at a moderate pace in the marriage season, during which families gift brides gold as lifetime savings.
Ajay Mitra, managing director of the World Gold Council’s India office, forecast the coins business would see revenues of about Rs300-500 crore over the next six months on sales of about 75-76tonnes.