Prime Minister Narendra Modi-led government has sparked festive cheer with its big GST reforms, but in desi households, gold remains the heart of every celebration. And, with bullion prices through the roof, many Indians this festive season are likely to give gold jewellery shopping a miss or at least trim it down.Demand for ornaments is likely to drop by as much as 27% from a year ago in volume terms during the three-week buying period, as per Surendra Mehta, national secretary at the India Bullion and Jewellers Association. Consumers, especially in big cities, are postponing spending due to high costs, he said.Even during the first leg of the festive season, gold demand from Raksha Bandhan to Onam, fell 28% from a year earlier to 50 tonnes, according to the India Bullion & Jewellers Association (IBJA).Jewellers said the fall—the sharpest in three years, or since the Covid period—was due to a 49% year-on-year rise in gold prices, which weighed on consumer sentiment. While many buyers stayed away, those who did shop mostly opted for lower-carat and lighter pieces, they added.Gold prices climbed to a record high on Tuesday, driven by safe-haven demand on fresh U.S.-China trade concerns, while broader economic and political uncertainties and expectations of further US interest rate cuts also lent support. In the Indian market, the price is hovering above Rs 1 lakh per 10 grams at the retail end, discouraging families, who generally allocate a fixed budget for their gold shopping.Gold has long been a preferred gift for weddings and festive occasions in India, while also serving as a popular investment. However, during a season when jewellery demand usually peaks — beginning with the nine-day Navratri festival in September and continuing until Diwali in October — bullion prices are nearly 50% higher than they were in the same festive period last year.As a result, gold demand may have dropped, but industry bigwigs are still optimistic for a good festive season.⁠Kalyan Jewellers’ Executive Director, Ramesh Kalyanaraman, said the company is ‘upbeat’ about the ongoing season and is fully prepared with fresh collections, campaigns and the launch of 15 more showrooms before Diwali.With prices trending upward, customers are “choosing to buy rather than wait”, he told ET Online. “In urban and Northern markets, there is growing interest in 18K gold, which was earlier used mainly for diamond jewellery, and is now also being chosen for even traditional designs in gold. In the South, the preference is still for 22K when it comes to gold jewellery.”Sharing a similar sentiment, Senco Gold said it expects robust festive and wedding season sales in the second half of FY26, confident of sustaining 18-20% topline growth for the year despite high gold prices."Year-on-year, gold prices are already up by 14-15%. Despite this, our outlook for consumer demand in Q3 and Q4 remains optimistic, underpinned by a positive economic environment and the recent GST rate cut. We are confident of achieving 18-20 per cent topline growth for FY26," as per Senco Gold MD & CEO Suvankar Sen.ET spoke to market watchers to understand what’s driving retailers’ confidence amid the record-high prices. Most large players are sitting on low-cost inventory, and the sharp rise in gold prices will translate into inventory gains, allowing them to post healthy profits in their books, explained Rahul Kalantri, Vice President- Commodities at Mehta Equities Limited.However, Kalantri warned that the operating reality is different. Jewellery companies are facing margin pressure, as making charges have remained largely unchanged compared to a year ago, even though gold prices have surged from around ₹70,000 to nearly ₹1,14,000 per 10 grams, he stated.“This means that while accounting profits may look strong due to inventory revaluation, EBIT margins are likely to remain under pressure, reflecting weaker underlying demand and limited pricing flexibility.”Demand has been under pressure for much of the year. India bought 17% less jewellery between April and June than a year earlier, with total purchases of the precious metal seen dropping in 2025 to the lowest level in five years, according to a World Gold Council report in July.......Read more at: https://economictimes.indiatimes.com/industry/cons-products/fashion-/-cosmetics-/-jewellery/golds-diwali-gloom-hides-quiet-glitter-in-indias-bullion-backrooms/articleshow/124543286.cms (ICE MUMBAI)

Fonte notizia: The Economic Times