Spot gold prices have been on a tear in 2024, with the metal rising by over 30 per cent in the first quarter of the year.
The trend is attributed to the current economic uncertainty and the rising cost of living. The Indian gold market is experiencing a significant shift in consumer behavior, driven by economic uncertainty and rising costs of living. Consumers are increasingly opting for cheaper alternatives, such as buying gold coins or bars, rather than expensive jewellery. This shift is evident in the sales data of textile traders, who are witnessing a decline in demand for gold jewellery.
Rising cost of living
Economic uncertainty
Increasing competition from cheaper alternatives
Growing awareness of gold’s value as a store of value
The rising cost of living and economic uncertainty are the primary drivers of this shift. As consumers face increasing expenses, they are looking for ways to save money and invest in assets that will retain their value. Gold, with its historical value as a store of value, is becoming an attractive option for many.
Growing popularity among consumers
Attractive pricing
Flexibility in investment options
The demand for gold coins and bars is on the rise, driven by their attractive pricing and flexibility in investment options. Consumers can buy gold coins or bars in smaller quantities, making them more accessible and affordable. This shift is also driven by the growing popularity of gold as a store of value, with many consumers seeking to diversify their investment portfolios.
Decline in demand for gold jewellery
Increased competition from cheaper alternatives
Shift in consumer behavior
The shift in consumer behavior is having a significant impact on the gold industry. The decline in demand for gold jewellery is being driven by the increasing popularity of gold coins and bars.
The Indian government has been trying to curb the surge in gold prices by implementing various measures to control the supply of gold in the market.
Increasing the import duty on gold to 5% from 10% to reduce the demand for gold.
Introducing a new tax on gold imports to increase the cost of gold for consumers.
Implementing a ban on the export of gold to reduce the supply of gold in the market.
Encouraging the use of alternative precious metals like silver and copper to reduce the demand for gold.Impact of Measures on Gold Prices
The measures implemented by the Indian government have had a significant impact on gold prices.
Vaishnavi M is not alone in her decision.
The increasing cost of gold and precious stones is a major factor driving the trend.
The rise of online shopping and social media has made it easier for people to compare prices and find deals.
The desire for custom-made jewellery is also on the rise, with many people opting for bespoke pieces that fit their individual style.The Impact on Jewellers
The Jewellery Swap is having a significant impact on the jewellery industry. Many jewellers are struggling to adapt to the changing market, with some reporting a decline in sales of up to 50%.
In the gold market, the trend is clear: consumers are increasingly opting for gold coins and bars over traditional gold jewellery. This shift is driven by a desire for convenience, affordability, and the ability to hold physical gold.
Consumers are seeking a more convenient and hassle-free way to invest in gold.
The rise of online marketplaces and digital platforms has made it easier for consumers to buy and sell gold coins and bars.
The increasing popularity of gold coins and bars among younger generations is also a factor.
Additionally, the growing awareness of the benefits of investing in gold, such as its potential to hedge against inflation and market volatility, is also driving the trend.The Rise of Gold Coins and Bars
In recent years, gold coins and bars have become increasingly popular among investors and collectors. These products offer a range of benefits, including:
Convenience: Gold coins and bars are easy to buy and sell, and can be stored in a safe or a secure location.
Affordability: Gold coins and bars are often less expensive than traditional gold jewellery, making them a more accessible option for investors.
Physical ownership: Gold coins and bars provide a tangible representation of ownership, allowing investors to hold physical gold.
Diversification: Gold coins and bars can be used to diversify a portfolio, reducing reliance on traditional assets such as stocks and bonds.The Impact on the Gold Market
The rise of gold coins and bars is having a significant impact on the gold market.
The country’s gold reserves are limited, and the demand for gold is high, making imports a necessary evil.
*Geopolitical tensions*: India’s gold imports are often affected by geopolitical tensions, particularly with neighboring countries like Pakistan and China. For instance, during the 2019 Kashmir conflict, India’s gold imports increased significantly due to the uncertainty and instability in the region.
*Economic conditions*: India’s economic conditions, such as inflation, interest rates, and GDP growth, also play a significant role in determining the country’s gold imports. For example, during the 2020 COVID-19 pandemic, India’s gold imports decreased due to the economic slowdown.
*Demographic factors*: India’s demographic factors, such as population growth and urbanization, also influence the country’s gold imports. For instance, the growing middle class in India has led to an increase in gold demand, particularly for jewelry and other ornaments.
*Global market trends*: India’s gold imports are also influenced by global market trends, such as changes in gold prices and supply and demand dynamics.
