The gold (COMEX:GCG14) demand dropped drastically during wedding season in India, falling by more than 20% over the previous year. The demand for gold remained subdued amidst high prices of the metal in domestic market. According to jewelers, the much-awaited wedding season has failed to revive the muted gold sales in the country.
Despite a fall in international market, the prices of gold in domestic market held firm. There were several reasons for gold prices ruling high. The tight import restrictions had led to shortage of the yellow metal in the country. The state-owned gold importing agency-MMTC and other recognized gold importing houses continued to charge hefty premiums on gold, that the jewelers were forced to pass on to customers. Also, the Indian rupee continued to remain weak against the dollar.
According to Bachhraj Bamalwa, Director, All India Gems & Jewellery Trade Federation, the high gold import duties and heavy premiums have pushed up jewelry costs in the country. Hence customers are seen restricting themselves to buying only what is essential.
Meanwhile, the demand for 14-carat gold picked up among Indian customers. It being 16% cheaper when compared to 18-carat gold, turned out to be the preferred pick in diamond-studded jewellery. As per retailers, the Indian jewelry market has taken a detour in recent times with more customers flocking toward lightweight jewelry.