Gold, Silver Rally Squeezes Indian Wedding Jewellery Budgets
Overview
Record-breaking gold and silver prices are poised to significantly dampen demand for wedding jewellery in India. Analysts predict a 30% drop in purchases as consumers opt for lighter, lower-carat pieces or postpone buying due to the precious metals' surge, fueled by global economic jitters and geopolitical risks.
Gold and Silver Prices Hit Record Highs, Threatening Wedding Jewellery Sales
Gold and silver prices have surged to unprecedented levels, casting a shadow over the upcoming wedding season in India. The rally, driven by global macroeconomic uncertainty, escalating geopolitical tensions, and anticipation of US Federal Reserve rate cuts, has pushed gold to ₹1.4 lakh per 10 grams and silver to ₹2.6 lakh per kilogram.
Industry Faces Demand Shock
The precious metals industry anticipates a significant downturn in wedding-related gold jewellery purchases. Projections suggest a 30% decrease in buying between January and July compared to the previous year. This sharp decline is forcing consumers to make difficult choices, impacting jewellers and the broader retail sector.
Consumer Adaptation and Shifting Preferences
Faced with elevated prices, consumers are showing increased price sensitivity. Many are opting for lighter-weight jewellery or lower-carat gold options, such as 18- and 14-carat designs, to manage their budgets. While the intent to purchase wedding jewellery remains, the volume and value are being recalibrated. Some investors are also diverting funds into gold and silver bars as safe-haven assets.
Market Influences and Future Outlook
The precious metals market has benefited from their status as safe-haven assets amid global instability. Geopolitical risks, including tensions in Iran and the ongoing conflict in Ukraine, coupled with economic data from the US, have further fueled investor confidence in gold and silver. Any further price increases could exacerbate the demand dent in the jewellery sector.
