Rising gold prices may pull down demand, but weddings hold key

Jaipur: With gold prices rising, jewellers in the Pink City fear that demand will come under pressure. They said that while wedding demand will remain largely unchanged, people looking to buy jewellery for fashion and use will wait for the prices to cool down, leading to reduced demand.
They also said costlier gold will also reduce the margins of the jewellers as they will try to sell as much as they can to increase their volume. Gold prices have increased to over Rs 57,000 per 10 gm.
Rajiv Jain, ex-president of Gem and Jewellery Exports Promotion Council, said, “We don’t see any erosion in wedding demand for jewellery. In fact, this segment has the potential to hold the market from falling demand. However, people who are looking to buy for personal use or safe keeping, they may likely to wait thinking prices will come down. Demand from this segment is likely to see some decline, but it will be marginal.”
However, many brokerage houses are predicting that the upward trend for gold to continue in 2023. They are basing their prediction on rising economic uncertainties and volatile equity markets.
In its commodity outlook report for 2023, ICICIDirect said that it expects the yellow metal price to move up towards Rs 62,000 per 10 grams and may hit all-time high in 2023. Similarly, it predicted silver to rebound towards Rs 80,000 per kg.
Jain said central banks of various countries are buying gold expecting their currencies to weaken in view of the weak economic growth outlook. That is also pushing up gold prices. But he said there are many wedding dates till June and those events will support demand despite some uptick in the prices of the yellow metal. In 2023, there are 64 auspicious dates which are relatively higher. The industry expects demand for jewellery to get a boost from the wedding segment.