As consumers opt for recycled gold or gold-plated jewellery despite hike in prices of the yellow metal, jewellery retailers are hopeful of maintaining profit margins .jpg) With increasing gold prices, consumers in the domestic market are opting to recycle their old jewellery. The yellow metal has already witnessed a high of Rs 19,198 during June 2010. Resultantly, consumers have been compelled to recycle their old jewellery instead of purchasing new ones.The jewellery retail market mainly depends on consumers belonging to the middle class. Therefore, with the rise in gold prices, most middle class families would prefer to recycle their gold jewellery as it is feasible for them. Moreover, consumers prefer to recycle their old jewellery as modern designs enhance the appearance of the jewellery pieces.
“Most consumers from middle class families desirous of possessing latest design gold jewellery prefer to exchange their old gold jewellery with new ones as they often do not have adequate cash. Although the trend of purchasing high volumes of gold has decreased, the urge to purchase the yellow metal would continue in domestic market due to festive seasons and weddings taking place throughout the year,” says Sheevendra Mallick, assistant store manager of Tanishq in New Delhi.
Flipsides of high gold prices
“Although demand for gold has been more or less steady in the country, if prices continue to surge, it may dampen consumer demand in the long run. However, on the other hand, rising prices of gold may also encourage a section of consumers to invest in gold in the hope of earning high profits, when gold rates surge further,” says Rajesh Chauhan, proprietor of Balaji Pvt Ltd, a mid-sized gold exporter in Bengaluru.
Owing to rising prices of the yellow metal, a section of consumers is now seen to be opting for imitation or gold-plated jewellery. Therefore, jewellery manufacturers engaged in creating imitation or costume jewellery would witness an upturn as demand for these products is gradually increasing in the retail market as they are light-weight, cost-effective and can be worn on any occasion.
Sabrina Mitchell |
