In a significant development, the retail price of gold scaled a record Rs 1 lakh per 10 gm in India, marking a historic milestone for the yellow metal. This unprecedented surge has prompted consumers to hoard gold, despite speculation of a further appreciation in the coming days, fueled by ongoing geopolitical uncertainty.

The Impact on Retail Sales

The recent price hike has had a significant impact on retail sales, with many consumers holding onto their household reserves, fearing a potential further increase in prices. According to Surendra Mehta, national secretary of the India Bullion & Jewellers Association, household gold sales in Zaveri Bazaar have come to a complete halt. As the prices continue to rise, consumers are becoming increasingly cautious, leading to a significant drop in demand.

• Estimated drop in volume terms in the first three weeks of April: 40%
• Initial estimates indicate a drop of 40% in volume terms compared to the same period last month
• Current sales momentum: sluggish, with consumers waiting to see how Akshaya Tritiya sales pan out

The Strategy Shift in Jewellery Retailers

In response to the rising gold prices, jewellery retailers have adjusted their strategy to focus on lower-caratage and lightweight jewellery. This shift in strategy is aimed at maintaining the retail price tag and meeting consumer demand. As Mangesh Chauhan, managing director of Sky Gold & Diamond, points out, manufacturers are now producing jewellery in 20 carat, 18 carat, and 14 carat, with a focus on lightweight pieces.

• Manufacturers are producing lightweight jewellery in 20 carat, 18 carat, and 14 carat
• Retailers are placing orders for lower-caratage jewellery to maintain the retail price tag
• Current orders are being booked for jewellery of 7-8 grams

Expert Advice on Gold Investment

According to Renisha Chainani, research head at Augmont Gold, investors may consider increasing their gold allocation to 10-15% of their portfolio to hedge against uncertainty in the market and inflation. This can be achieved by buying physical bars and coins, gold-backed financial products such as digital gold, and gold exchange-traded funds.

“With rising geopolitical tensions, central bank buying, and the possibility of economic instability, investors may want to consider increasing their gold allocation to 10-15% of their portfolio from the traditional allocation of 5% to hedge against uncertainty in the market and inflation and for overall diversification,” says Renisha Chainani.

Key Statistics

The Rising Geopolitical Tensions

The ongoing geopolitical tensions between the US and its allies, particularly the US-China trade war, have contributed to the surge in gold prices. According to experts, the uncertainty in the market and the possibility of economic instability have led to a rise in gold prices. This trend is expected to continue, with investors seeking diversification and hedging against potential losses.

Conclusion

In conclusion, the record-high gold prices of Rs 1 lakh per 10 gm have significant implications for the retail industry and investors. As the prices continue to rise, consumers are becoming increasingly cautious, and jewellery retailers are adjusting their strategy to meet consumer demand. Experts advise investors to consider increasing their gold allocation to hedge against uncertainty in the market and inflation. With rising geopolitical tensions and economic instability, investors may want to diversify their portfolio by investing in gold-backed financial products.