With continuous rise in gold prices, there has been a shift in consumers’ perception of purchasing gold. Previously, consumers who were fond of the yellow metal bought gold in grams and investment orders were also done in grams. However, with a surge in the prices of gold, a new trend can be noticed among consumers. It has been observed that consumers have shifted from weight budget, which is gram, to rupee budget. Therefore, the rise in gold prices has lowered the demand of the yellow metal.

“The availability of recycled gold has risen in the domestic market,” says Harsh Dasgupta, proprietor of Trident Jewels, a small-sized jewellery manufacturer and supplier in Hyderabad. There has been a surge of 12.5% in recycled gold during the third quarter of 2009, due to rampant selling of old jewellery by consumers. 

In a poll conducted by Retailing360, it was observed that 67% of the respondents felt that gold will be able to maintain its lustre, while 33% of the respondents do not agree with the same.

According to data released by Gold Field Mineral Services (GFMS), a leading research firm, in the third quarter of this year, 18 tonnes of gold has been recovered by the Indian refineries, whereas during the same period in 2008, 16 tonnes of gold was recovered.

The price of gold was Rs 14,488 per 10 gram in the first quarter of 2009, which rose to Rs 14,573 per 10 gram during the second quarter and to Rs 15,118 per 10 gram in the third quarter of this year. There has also been a decline in gold imports from 261 tonnes in the third quarter of 2008 to 130 tonnes during the same period in 2009. 

Road ahead

“With skyrocketing prices of gold, consumers in the Indian market are cashing in on their extra gold holdings as of now; however, they expect the prices of gold will again decline by next year,” says Samrat Rai, a mid-sized jewellery manufacturer and supplier in Pune. Therefore, currently consumers are selling their gold to gold retailers in order to earn higher profit.

Sabrina Mitchell