Unlike gold coins, biscuits or bars, jewellery carries additional charges that makes it more expensive to buy in the first place. The additional costs also mean you may not be able to recover your capital even when the prices go up.
Designer, antique, or vintage gold jewellery can be sold for far more than the gold used to make the piece is worth alone. However, worn pieces or items with a low market value, may earn you more if you scrap it for gold. To know if you should resell your gold jewellery as-is, have your item evaluated.
Nevertheless, selling gold jewellery can be a profitable opportunity, especially if you have a collection of valuable pieces. However, as reiterated by multiple commodity retailers, the price you get when selling your gold depends on why you're buying gold.
For years, the elders around me have discussed extensively the importance of buying and keeping gold, precious metals and jewellery in sturdy safety deposit boxes as a form of insurance and eventual inheritance for their descendants.
Manufacturers are increasingly focused on producing lightweight pieces to satisfy demand from the younger consumer, especially those who want daily wear gold jewellery that matches their adoptive Western-style attire. Silver jewellery is becoming more common due to high gold prices and platinum is making an appearance, particularly in male jewellery items, but neither appear to have the cultural significance or the aspirational quality of gold and therefore do not pose a major threat.
Over the last few years the Indian gold market has grappled with numerous changes in the regulatory environment and in consumer behaviour. Looking ahead, gold jewellery demand will face further challenges. Changing demographics and the possibility that millennials will move away from gold as other luxury items demand their attention cannot be ignored. Against these headwinds, gold jewellery demand will likely benefit from strong economic growth and growing urbanisation as incomes rise and the middle class grows. As more people are lifted out of poverty, gold jewellery demand will benefit.
E-commerce opportunities are increasing and as a more robust regulatory structure emerges to support online gold jewellery sales at home and abroad, manufacturers and retailers will be able to use this to extend their reach.
The gold market forms a deeply intrinsic part of India. For the population of 1.4bn, gold, and specifically gold jewellery, plays a central role, acting both as an adornment and a form of investment. It is therefore not surprising that for decades India was the largest consumer of gold before being overtaken by China in 2009. 12 In 2021 India bought 611t of gold jewellery, second only to China (673t) but comfortably ahead of all other gold-consuming markets (Chart 1). 13
Much of the Indian gold market is very traditional, reflecting important cultural and religious ties. This can be seen in the long-standing preference for 22-carat jewellery and the dominance of bridal jewellery. But the gold market is evolving, with changing tastes and designs driven by economic growth, globalisation and changing consumer preferences. In recent years, for example, demand has grown for lightweight and studded jewellery.
Gold is deeply embedded in Indian culture and purchases are often driven by tradition. Typically, all family members are involved in decision making about how and when gold jewellery purchases are made. Discussions over the years between Metals Focus and retail jewellers have revealed that weddings remain the key motive for buying gold in India. As our 2019 consumer retail insights survey demonstrated, weddings were the number one purchase occasion to buy gold (17%), followed by other important occasions such as birthdays (12%) and festivals (11%).
Gold has always been considered a sacred colour, and so gold adornments are worn for specific rituals and events. In religious ceremonies gold coins are often used for pujas (an Indian worship ritual). Most Indian gods and goddesses wear gold embroidered clothes or jewellery. If one looks at the images of various deities, such as Lakshmi, Ganesh or Krishna, one will always find them wearing some form of jewellery.
During the festivals of Diwali and Akshaya Tritiya it is considered extremely auspicious to buy gold. Dhanteras (the first day of Diwali) usually falls during October or November, and Akshaya Tritiya between late April and early May. Hence retailers across the country introduce attractive designs in the run-up to these occasions. On average around 40-60t of gold is sold in India during these two auspicious festivals alone. 15 Underlining the importance of these occasions, the household survey of India Gold Policy Centre-IIM Ahmedabad (IGPC-IIMA) found that 65-70% of respondents cited festivals as their main gold purchase occasion, with Dhanteras and Akshaya Tritiya accounting for 30-35% of these purchases.16 And with prominent overseas Indian populations, the Middle East and East Asia also see significant gold buying at these times. 17
If we analyse the gold jewellery market by weight, the importance of weddings and bridal wear is clear (Table 3). India is a young country with more than half the population below the age of 25 (and 65% under 35). Although there are no official figures for the number of weddings in India, an estimate is between 11 and 13 million per year. As the average age of marriage for women in India is 22, the number of weddings per annum looks set to remain strong. Considering these numbers, demand for bridal jewellery should remain robust over the long term.
The field research undertaken by Metals Focus reveals some interesting trends. 21 Bridal jewellery remains the dominant segment (approx.50-55% market share by weight), despite rising domestic gold prices over the last decade and stiff competition from other luxury purchases, such as destination weddings and foreign holidays. The rupee gold price has almost doubled since 2012, encouraging manufactures gradually to shift towards lighter weight pieces, but bridal jewellery has been relatively price inelastic, losing only around 5-10% market share in that time.22 Furthermore, bridal jewellery has faced increasing and stiff competition from other luxury purchases, such as destination weddings and foreign holidays. Wedding jewellery tastes vary considerably across different regions (Table 4).
The Indian gold market has witnessed several changes, driven by both regulation and consumer behaviour (Focus 1). Amid these, plain gold jewellery has maintained its dominant 80-85% market share. Most plain gold jewellery sold in India is 22-carat, but there is a growing market for 18-carat pieces.
Studded jewellery has an estimated market share of 15-20%. In Northern India this share is considerably higher, in contrast to the South where consumers are more inclined towards plain gold products. 60-70% of these pieces are set with diamonds; the other key segment of studded jewellery pieces are those set with precious or semi-precious stones. This type of jewellery, which is extremely popular across much of the country, is termed Polki, Kundan or Jadau, and is manufactured in the states of Rajasthan, Gujarat, Andhra Pradesh, and West Bengal.
To begin with, economic liberalisation paved the way for abolishing the Gold Control Act, which allowed the metal to be freely imported. This helped the retail trade to flourish as it became much easier to source gold. In addition, with incomes rising, tastes and preferences for jewellery have also changed. For instance, with better exposure to Indian and global trends, due to rising travel and internet penetration, jewellery tastes are no longer local and traditional. A consumer in the South of India is no longer opposed to Jaipur jewellery or studded diamond jewellery. Similarly, temple jewellery, which is widely popular and traditionally bought only in the South, now has acceptance even in the North. Modern takes on traditional jewellery are also increasingly popular, and young consumers are no longer fixated on buying only traditional pieces. The concerted shift from local to regional and national buying patterns has largely benefited chain stores, whose market share has grown sharply in recent years.
Separately, consumer behaviour has also been affected by the trend in rupee gold prices, which have touched record levels. Consumers normally have a fixed budget when they visit stores and so the amount of gold they can buy will vary with changing gold prices. As a result, over the last five to six years retailers and manufacturers have increasingly focused on lightweight products to satisfy a range of budgets. This is important, even for traditionally heavy bridal pieces and temple jewellery. As a result, I believe, over the years there has been at least a 10% drop in average product weights.
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