Indians start buying physical gold before Diwali despite high prices

Despite high prices, Indian consumers have been undeterred as they bought gold this Dussehra, setting the tone for buoyed demand later during Diwali in the midst of the economic uncertainty created by the ongoing Covid-19 pandemic.

Gold, being a non-essential item in the times of pandemic, had taken a backseat in consumer preference since Covid-19 outbreak. But as the economy opened up in a phased manner, consumers slowly started to take interest in gold as the yellow metal has given more than 25% return this year and the outlook on gold continues to remain bullish in one of the top gold-consuming nations of the world.

Jewellers said that Dussehra demand has perked them up and they are expecting a much better Diwali. They said the pent up demand is already showing and even the fear of the virus has dissipated as the recovery rate goes up.

The number of coronavirus cases reported in India in a span of 24 hours dropped below 40,000 after over three months, while the new fatalities registered during the same period remained under 500, according to the Union Health Ministry data updated on Tuesday.

“This year’s Dussehra has lived up to our expectations. It has set the tone for the rest of the festive season. In quantity terms we have done business up to 80 percent vis-a-vis last year and in terms of value we have done better than last year, given the higher price in gold this time around,” said Saurabh Gadgil, managing director, PNG Jewellers.

“Foot falls consisted of people coming to pick up deliveries of pre-booked orders as well as first time shoppers. We have also seen sizable investment demand, given the auspiciousness of Dussehra. Going by the current trend and excitement, we think we will exceed all business expectations this Diwali,” said an optimistic Gadgil, who is based in Pune.

Ishu Datwani, founder of Anmol Jewellers, said that last year’s Dussehra sales were definitely much better because there was no pandemic. “We did 60 percent of last year’s sales this Dussehra. Although sales were down by 40%, this year’s Dussehra sales definitely point towards a recovery in demand and there is no question or doubt about that.”

Datwani has witnessed an average ticket size of more than Rs 5 lakh at his store in Dussehra on Sunday. Buying of gold continued on Monday too.

“Based on the Dussehra demand, we are expecting a much better Diwali – an almost normal Diwali – this year as compared to last year. People are ready to spend now. The pent-up demand is showing and even the fear of the virus has reduced, which is the most important factor,” he added.

Snehal Choksey, director of Shobha Shringer Jewellers, said there has been a 25% slump in sales compared to last Dusshera. “We have observed that the average ticket size has also increased from last year. Reason being that the quantity of gold would cost 30% more this year. Another behaviour pattern that consumers don’t want to wander from store to store, but want to make their entire trousseau purchase under one roof. All of this has led to an increase in ticket size,” he said.

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