Jewellers optimistic about Dhanteras amid positive consumer sentiment and weakness in gold prices - know what experts say

Positive momentum through the festive season and weakness in gold prices will likely boost demand this Dhanteras, jewellers said, but added that inflation worries and overall rise in cost of living may keep sales at par with last year.

In 2021, after the first wave of the pandemic, revenge purchases along with postponed weddings boosted demand resulting in exceptionally good Dhanteras sales which crossed the pre-pandemic levels. The gold prices during Dhantera 2021, at around Rs 46,500-47,000 per 10 grams, also supported the demand.

This year, the industry is cautious in spite of benign gold prices, which is ruling at around Rs 47,000-49,000 per 10 grams, and overall positive consumer sentiment.

Dhanteras, which marks the first day of Diwali in India, is considered auspicious for buying gold and silver as part of Hindu festivities.

"We have witnessed a very positive momentum since the last 8-10 days. The demand for jewellery during Dhanteras this year is likely to be at par with last year as 2021 was an exceptional year for the industry when the country slowly came out of the pandemic.

"Postponed weddings and revenge purchases last year boosted demand with sales crossing the pre-pandemic levels," All India Gem And Jewellery Domestic Council Chairman Ashish Pethe told PTI.

Similarly, World Gold Council Regional CEO, India, Somasundaram PR said the purchase of gold as a token boosts the positivity surrounding Dhanteras.

"Moreover, with recent corrections in local gold prices and a favourable monsoon, festive sentiment among retail consumers appears to be positive," he pointed out.

However, the impact of inflation on household finances may affect gold jewellery demand, he cautioned.

"Unlike the Diwali season of 2021, this season may not have the advantage of pent-up demand or savings from muted wedding celebrations fuelling higher gold purchases.

"Having said that, this is a busy buying season, and with gold being a valuable hedge against inflation, any further price declines in the coming weeks could result in a surge in demand," he added.

Senco Gold and Diamonds Managing Director and CEO Suvankar Sen opined that this year the industry is likely to witness standardised demand as things have gone back to normal after an exceptional 2021. "We expect the growth in sales will be either in high single digit or low double digit compared to last year, but the ticket size will be low, which will be compensated by higher footfalls," he noted.

Weak prices may not have much impact on sales as the weak rupee has restricted further fall in gold price, he said.

"This year the sales might get a boost as Dhanteras falls on a weekend and is spread over two days. After a good first quarter and a muted second quarter the industry is looking forward to a positive third and fourth," he added.

On gold prices, JM Financial Services' Rahul Sharma stated that rates are moving sideways to a negative direction from the last six months due to rising bond yields and a strong dollar index.

"The rising interest rate scenario is having a negative impact on precious metals. Looking at the overall scenario, some more downside is left in the gold prices. However, it is expected to remain in a broader range of Rs 48,500-53,000 for the coming few months.

"Lower gold prices may actually be a good thing for jewellery shoppers this Diwali but this also brings a good opportunity for traders to buy at lower levels for a possible rebound in November," he added.

Meanwhile, De Beers Forevermark Vice President Amit Pratihari said the festive season is witnessing strong demand since all markets are completely operational after two years.

"There is still a pent-up demand for jewellery and hence we foresee that this festive season will be extremely strong, accelerating the momentum of diamond jewellery sales.

"Owing to their inherent preciousness, diamonds are more sought after and have seen a rise in demand. With the festivities in full swing, we are expecting a double-digit growth this festive season," he added.

Kalyan Jewellers India Executive Director Ramesh Kalyanaraman said with consumer sentiment shifting from unorganised to the organised sector, the latter will gain during this Dhanteras.

Last year was an exceptional year as the country came out of the pandemic. However, with the ruling weakness in gold prices and no pandemic related uncertainties, things are looking positive this year, he said.

"We have high hopes and are expecting a better and stronger Dhanteras compared to last year. For us, the pre-booking is strong and our e-commerce division, Candere, has done well and has gained popularity.

"We have also gained a lot of market share with the opening of more stores resulting in an increase in customer base. We are looking forward to a positive year this Dhanteras," he added.

PNG Jewellers Chairman and Managing Director Saurabh Gadgil said that this year has been very strong since the beginning of the festive season, mainly supported by the weakness in gold price.

"We expect this trend to continue during Dhanteras and Diwali as demand for jewellery remains strong. Even as 2021 Dhanteras was exceptional, with the current momentum we expect around 20 per cent growth in sales this year compared to last year," he said.

Uttar Pradesh-based Aisshpra Gems and Jewels director Vaibhav Saraf said the consumer sentiment is positive and the industry is optimistic about achieving a growth of 15-16 per cent in sales this Dhanteras compared to last year.