India Eyes Multi-Fold Jump in Diwali Gold Sales

NEW DELHI (Scrap Monster): The recent decisions to raise the annual gold investment limit and to do away with the need to provide identity proof on gold purchases of INR 50,000 and above are likely to boost gold sales in India. The upcoming festive season demand will take gold sales to new heights, say industry participants. The decline in international gold prices could boost domestic demand in India.

According to jewellers, a 20%-30% jump in gold sales is expected during Diwali this year. They expect overall improvement in demand for both gold and diamond jewellery during the season. The government’s decision to put gems and jewellery in the 3% slab under GST scheme too has translated into a positive sentiment among buyers. The onset of wedding season will further boost the demand, they said. The wedding season demand may lead to increased demand for big ticket jewellery.

Apart from store sales, online sale of gold jewellery is also expected to benefit from the positive market sentiments. Mobile payment platform Paytm expects five-fold jump in gold sales through its payment platform during this season. It must be noted that Paytm had recently entered into partnership with gold-refiner MMTC-PAMP to facilitate gold purchases through its platform. Under the scheme, Paytm wallet holders are allowed to purchase 24-carat gold online and store them in MMTC–PAMP secure vaults without any charge. Further, the company has already announced its decision to make significant investment amounting to INR 10 crores, aimed at broad expansion of its customer base.

Meantime, gold prices in India swung to premium for the first time in more than three months, ahead of Diwali next week. Gold, which was offered at a discount of up to $3 per Oz during last week, was charged a premium of up to $2 per Oz this week. The premiums are likely to jump further as festive demand peaks up.

Jewellers have boosted their gold purchase in anticipation of a healthy retail demand. This has resulted in 31% jump in country’s gold imports during the month of September. According to provisional data released by GFMS Thomson Reuters, the country imported 48 tonnes of gold during the previous month. However, the September imports stood much lower than the average monthly gold imports of 75 tonnes during 2017.

Despite anticipated jump in demand, the monthly imports in October are not sure to touch the import levels during the same month last year. India’s gold imports had totaled 99 tonnes in October 2016.