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Retail Sales of Precious Jewellery Are Supported By

 

Retail sales of precious jewellery have been supported by:

Real per capita gdp growth

Exhibit 2-7: Real per capita gdp growth (2003-2013)

India real per capita gdp.png

Source: IMF WEO Database October 2014, Equity Communications

Precious materials price growth

Exhibit 2-8: Trend in rupee gold price

Trend in Rupee Gold Price.png

Source: Equity Communications, WGC

Rupee US dollar exchange rate

Exhibit 2-9: Trend in rupee/dollar exchange rate

Rupee Dollar Exchange Rate.png

Source: Equity Communications

Trend in consumption of gold jewellery

Exhibit 2-10: Trend in consumption of gold jewellery

Trend in consumption of gold jewellery.png

Source: Equity Communications, WGC

Key Takeaways

Gold jewellery

Retail sales of gold jewellery in India are predictable because of standardized pricing.

The golden formula:

                     ^Retail sales = ^Rupee price of gold + ^Volume of gold consumption

Retail sales of gold jewellery in India have tracked increases in the price of gold because of the strong adornment+investment demand factor. Volumes change from year to year depending on consumer sentiment and the macro-economic background. Nevertheless, significant gold price inflation can put massive pressure on consumer demand.

In the recent past, consumption of gold jewellery in India gained momentum in the aftermath of the Global Financial Crisis. India rode the wave of gold price inflation, encouraged by stronger economic growth and lower inflation. Consumption of gold jewellery subsequently lost momentum when the situation reversed. Economic growth is now weaker and consumers have been battling higher inflation.

Complementary jewellery - diamonds, platinum, silver, gemstones

Overall, India is modernizing and trying out new things. Consumers have shown a willingness to amplify traditional demand for gold jewellery with purchases of jewellery made from other precious materials like diamonds and platinum. At steady gold prices, demand for such products will grow faster than demand for gold jewellery products simply because it is still in the nascent stage.

For the most part, diamonds of the cheaper variety are becoming more prevalent within day-to-day jewellery pieces as they offer flexibility in terms of style and colour, often adding a more contemporary feel to a look or outfit. For this reason, consumption of diamond jewellery could move away from the adornment+investment category and towards the adornment only category.

Links to Pages on India Jewellery Market

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