Gold prices soar, but festive buyers keep shopping

Gold prices experienced a significant surge of 7% over the past 10 days, reaching Rs 1.52 lakh per 10 grams, marking one of the most rapid short-term increases in recent months. This price surge has prompted consumers to increase their purchases, despite concerns over the elevated prices, as expectations of further gains outweighed these concerns. The rally sets the stage for higher spending during the festive season, with sales volumes remaining under pressure, according to jewellers.

The price increase has encouraged consumers to step up their purchases, expecting gold prices to potentially cross Rs 1.60 lakh per 10 grams, which is anticipated to continue. Despite the higher prices, demand for gold is expected to be lower by 10% year-on-year, but the value of purchases will be higher during the festive season, which begins with Rakshabandhan on August 28. Some buyers are purchasing gold rather than waiting, anticipating further price increases.

While retailers are witnessing a decline in footfall, consumers are adapting to higher prices rather than avoiding jewellery altogether. Lightweight designs, lower-carat gold, and silver are gaining popularity, with consumers gravitating towards these options due to the more balanced value equation. The intent to buy jewellery for festivals and occasions remains strong, despite price fluctuations.

Customers typically budget for these events months in advance, and this intent remains unchanged, even as prices fluctuate. Customers are increasingly opting for versatile precious and diamond jewellery, as well as considering 18-carat jewellery and value-led offers to make larger purchases more accessible.