It would seem that Indian brides and the country’s government have something in common, both are both are elated that gold prices have been sliding.
While the sharp decline in gold prices is set to have a favourable impact on the Indian economy, with its high current account deficit and the overall balance of payment situation, Indian brides have been waiting for just such an occasion.
Though some weddings are fixed for December, the precious metal’s biggest price drop in three decades in April has provoked a mad clamour for the most ostentatious jewellery design on retailers’ shelves. More grams for less, is the new motto!
On the other end of the spectrum, the Indian Prime Minister’s Economic Advisory Council is also happy: though gold imports are clearly set to go up in 2013-14 due to a fall in prices, in value terms, they will fall.
The Council has noted that gold imports are likely to be around 900 tonnes in 2013-14, given the current price of gold. However, due to lower prices, some moderation in the level of gold imports is expected, and total imports are set to slide to $45 billion, down nearly 20% from the 2012-13 level of $56 billion.
In 2011-12, India's imports of gold were highest at $62 billion, which put a strain on its deficit and payment figures. Moreover, while the net oil import bill for 2012-13 was higher by $11 billion, gold imports were lower by $5 billion.
GOLDEN BRIDES
While the government continues to hope that demand for gold will eventually fall as inflation heads lower, right now, Indian brides are working up a huge appetite for the precious metal.
Manisha Mehta is one such lucky bride-to-be. She had initially planned to buy a heavily bejewelled gold choker chain, which would fit snug around the neck, comprising around 50 grams of gold. She has ended up purchasing a neck piece worth 85 grams of gold encrusted with five rubies.
"Gold is a must for every wedding. I have been saving away for two years for my wedding jewellery and was ready to buy it at any cost. The slump in price has helped me buy a better, bigger, more royal necklace, which is bound to attract everyone's attention at my wedding," said Manisha.
Though the wedding itself is in December, Manisha considers herself a very lucky bride to have managed to bag gold "at such a cheap rate".
"I have actually been steeling myself to shell out more for gold. Just two months ago, the price of gold had crossed $590 (Rs 32,00) per 10 grams. With the gold price slumping to around $460 (Rs 25,000), I decided to jump right in and made my purchase," she said.
Many like Manisha are making their gold jewellery purchases ahead of time. Jewellery store owners, too, say the number of customers have risen massively, over the last couple of days.
"We have had more than a 50% jump in customers flocking to our store this past two weeks, as compared to the usual days," said Jayeshbhai Sonkar, a bullion retailer.
Many like Sonkar say though the demand for gold is usually high during the wedding season in India, which will start from the end of this month, the slump in price has accelerated demand to new levels.
"The demand for gold has surged to around 50 kilo a day from 30 kilo earlier. I have run out of gold coins and bars. I am waiting for my next week's stock to come in," said Omprakash Bhalla, bullion retailer at Mumbai's Zaveri Bazaar.
Shree Riddhi Siddhi Jewellers owner Narendra Gupta said customers have been visiting his store even late in the evenings, when it is normally considered not such an auspicious time to buy gold. "All caution is thrown to the wind. People are buying jewellery like there is no tomorrow," he said.
Another 67-year-old businessman trader Mabil Abdul is delighted at the price fall. "My daughter is getting married only in end-July. As soon as we came to know the price of gold had started sliding, we decided to buy. We have added three extra neck pieces and chains and four bracelets to our list, which were not on the agenda. We had to buy gold anyway, which is a must for an occasion like marriage. Not only have we advanced our shopping because gold has become cheaper, we have also added to our list of items," he said.
The timing could not be better, especially in a country like India. Traditionally, from end-April to June, most gold jewellery purchases are made ahead of the wedding season when brides are customarily given gifts of gold.
With gold prices expected to go down further, retailers are intent on stocking up their stores with more gold pieces, eager to help brides and women in their purchase of the favoured metal. Most traders however, insist that gold prices are set to climb nearer Diwali, India's festival of lights, when prices could escalate to even 645.25 (Rs 35,000) from the current $470 for ten gram.