Gold crosses Rs 1 lakh mark! But jewellers worry over sluggish sales - Here's why
crossed the Rs 1 lakh per 10 grams mark on Wednesday, dampening sentiment among jewellers just ahead of the festive season.
This is the first time in nearly two months that prices have breached this psychological barrier.
The yellow metal has gained almost 2% this week, rising from Rs 98,791 on Monday to Rs 1,00,502 per 10 grams on Wednesday. Including the 3% GST, the effective consumer price now stands at Rs 1,03,507 per 10 grams.
Jewellers fear the price surge may further dent demand during the upcoming high-consumption festive period starting with Raksha Bandhan.
'China is heavily buying gold. The Central Banks across the globe too are buying gold.
Big investors are also purchasing gold. All these factors are driving the gold prices,' Surendra Mehta, national secretary of the India Bullion & Jewellers Association (IBJA), the apex industry body, told ET.
The previous instance of gold reaching Rs 1 lakh per 10 gm occurred on April 22, following US-China trade tensions when the US implemented higher tariffs on China.
Silver prices increased significantly, reaching Rs 1,15,500 per kg on Wednesday from Rs 1,11,000 per kg on Tuesday, representing a Rs 4,500 per kg increase in one day.
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Financial analysts attribute the rise in precious metals to a weakening dollar index and uncertainties surrounding US trade tariffs, which encourage safe-haven investments.
The Indian currency experienced pressure after Nato's warning about secondary sanctions on Russian oil imports, contributing to increased local gold and silver prices. As India imports these precious metals, currency depreciation automatically affects prices.
Suvankar Sen, managing director of jewellery chain Senco Gold, indicated that consumers are now choosing lightweight gold jewellery to accommodate their budgets.
'Volume-wise the drop will be 15%. If the price rise continues, then demand for 18 karat, 14 karat and 9 karat gold jewellery will increase,' he told the outlet.
With the festive season starting next month from Raksha Bandhan and continuing through Diwali, gold demand is typically strong.
However, this year, persistently high prices are dampening sentiment.
According to ET, Dinesh Taluja, CFO of Reliance Retail, said the company's jewellery business has seen higher billing amounts due to rising gold prices, but the number of transactions has declined.
'The business is on steady growth, but obviously there is an impact on the significant increase in gold prices. In volume terms, the demand for gold has gone down,' he noted.
The IBJA representative suggested that Raksha Bandhan jewellery sales will likely suffer as consumers resist the Rs 1 lakh price point.
Faced with high prices, consumers are holding back on non-essential gold purchases and turning to more affordable alternatives like lightweight, lower-karat, silver, or studded jewellery.
However, investment-driven buying continues, with customers showing interest in gold coins, bars, and plain chains, which carry lower making charges and are considered better value for long-term holding.
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