Jewelers are offering up to 50% discounts on their jewelry products in order to attract more consumers in the current festive season of the remaining months of the year. They hope that this will ensure a boost in demand from rural areas in light of the losses they've been hit by earlier this year. To be more specific, the gold sales of India has been affected by 10% to 20% due to the Indian Government mandating that PAN submission should be mandatory for jewelry purchases worth about 2 lakh and beyond back in January 1, 2017. Indeed, gold prices for 2016 were up 10% higher. This curbed demand along with a closer eye of taxation authorities in regards to gold sales and high import duties. The holiday surge is what the jewelers want to make up for this discrepancy.
The Current State of the Indian Jewelry Market
- Last month's peak of 32,000 per 10 grams in terms of the gold price has lowered by 7% to 29,747 per 10 grams. The good news is that it's 9.6% higher than last year's price, but there's still a bit of a discrepancy there that needs addressing. In the festive season, because there was a drop in gold price, there should be a boosted rate of demand for jewelry containing gold in the Indian market, particularly the rural market that usually can't afford such important and precious ornamental assets.
- The World Gold Council India's Managing Director, Somasundaram PR, agrees with the assessment that demand will be hopefully driven by the lower gold prices and the seasonal festive spirit of spending and buying around this most wonderful time of the year. Back in March 1, 2016 and onwards, demand was affected due to a 42-day strike around that time, the managing director takes note.
- There wasn't much demand with AkshayaTritiya either because rural or provincial Indian purchasing power was disturbed by twin droughts that came one after another. Furthermore, aside from the strike and the lowered purchasing power, the market sentiment at the time was altogether poor, to say the least. They expect (or rather, hope for) a 10% to 20% higher festive demand for gold jewelry barring any unforeseen incidents down the line.
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