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Gold has been under pressure of late due to the strengthening US Dollar and the Federal Reserve’s hawkish shift in tone.

Covid-related restrictions are gradually easing across the country with several cities and states such as Delhi, Maharashtra, West Bengal, Kerala gradually relaxing restrictions. But the gold jewellery market is not happy about their business all over the country.

Since May, retailers faced a very tough time. They hoped that the unlock process would begin and help the situation normalise and their sales would pick up.

Retailers across the country witnessed merely 8%-10% customer footfall in the last month. The dip in the footfall was accelerated by the rising prices of the metal that is again close to Rs 50,000 per 10 gms.

Sale woes

In Delhi and Maharashtra, the retail gold market was almost closed for the past month. In Bengal, the market was open for three hours from 12 noon, which, retailers said was not conducive for the sale of jewellery.

“The government order said that gold retail shops can be open from 12 noon to 3 pm from May 6 to June 15. In this window, we got only 3-5 customers a day. If we compare it with December-January time, the footfall declined by at least 90%. We expect customers to increase from June 16 as the government has increased the business hours,” said Samar (Bablu) Dey, working president, Swarno Silpo Bachao Committee (SSBC).

The Bengal government has extended the timing from 11 am to 6 pm.

“In the last 40-45 days, the sales from the brick-and-mortar stores became almost negligible. There is no transport and simultaneously the price of gold is hovering between Rs 49,000 and Rs 50,000. We have recorded only 7-8% sales in the last couple of weeks,” said an official of B C Sen & Co, one of the prominent retail chains in eastern India.

Price factor

At the onset of the second wave of infection, Indian equity markets rose to record highs, and inflows to mutual funds also zoomed. However, at the same time, the price of gold is again back to around Rs 50,000/10gm.

For the past couple of days, the price of gold has been hovering between Rs 49,000 and Rs 50,000. But experts feel that the price of the yellow metal would again race towards Rs 56,000-Rs 58,000 once the Covid restrictions get over.

However, some other experts feel the price would go down further as the price of gold in the international market would also decline.

But retailers are sceptical that this price may act as a disincentive at a time when consumers are drastically cutting down on discretionary expenditure and saving for the rainy day.

Some optimistic

Some retailers think that sales would go up once the lockdown eases. The festival and wedding session will push up the sale if the third wave does not play spoilsport.

“Last year the situation was really bad, but this year shops are not completely closed as the shops were open for 3 hours. We expect better sales figure in the later part of the financial year,” said Subhra Chandra from PC Chandra Jewellers.

“The sale is nominal, but not very bad if we consider the current situation. FY22 will be better than FY21,” added Chandra.

Demand slump

The first wave of Covid-19 pandemic led to sloppy demand for gold jewellery in India for the calendar year 2020. Demand dipped by 42% to 316 tonnes as compared to 544.6 tonnes in 2019, a World Gold Council (WGC) report shows.

Along with pandemic, record price hike of gold is another important issue, said the WGC report.

The value of jewellery demand was Rs 1,33,260 crore, down by 22% from Rs 1,71,790 crore in 2019.

The total gold (jewelley and investment taken together) demand for full-year 2020 was 446.4 tonnes compared to 690.4 tonnes in the previous year.