Revived sentiments and relaxed norms under the Prevention of Money Laundering Act (PMLA), combined with stable prices, saved the day for jewellers across the country ahead of Diwali.

Trader sources from key markets such as Ahmedabad, Mumbai, Bhopal reported a revival in demand after last week’s subdued buying sentiments.

“The mood is good and we are seeing real consumer demand for gold jewellery and also partly for coins and silver bars. We expect to match Dhanteras sales numbers with those of last year,” said Nitin Khandelwal, Chairman, All India Gems & Jewellery Trade Federation.

Even as purchases on the crucial day of Dhanteras has been encouraging for most jewellers, the ticket size of the purchases has been a tricky aspect. “The rush at the jewellery houses isn’t a reflection of the actual sales — the average ticket size has dropped significantly below ₹2 lakh. Most people are preferring to make an indicative purchase of bullion, just to maintain their traditional custom,” said a jeweller in Ahmedabad.

Apart from shrinking ticket size, the consumers' preference has also showed a tilt against gold and towards diamonds.

Small ticket size

“Most of the buying is taking place at sub-₹2 lakh levels. The big ornaments or big volumes are not much in demand. This time we see more demand for diamonds, indicating a shift in the consumer preference away from gold,” Khandelwal told BusinessLine .

According to analysts, gold prices have become prohibitive at the current rates.

“At the current levels, gold prices are not a good entry level for investors to buy the yellow metal even if it is Diwali. The risk-to-reward ratio is not in favour of the investor at this level. Investors should avoid entering at the current level and wait for favourable price points such as ₹28,500 per 10 g,” said Prathamesh Mallya, Senior Research Analyst (Non-agro Commodities) at Angel Broking.

However, the yellow metal continues to dominate household gold purchases around the festival season.

While most jewellery retailers have seen an increase in credit/debit card, RTGS and bank cheque transactions post demonetisation, cash continues to dominate sales.

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