It was a precious year for gold with over 18 percent gains in the global markets and about 24 percent rise in gold prices in India on the back of uncertainties around US-China trade talks and slowing global economic growth. Jewellery demand, however, has been taking a hit in the last couple of years and there was no exception in 2019.

Share Market Live

NSE

ICRA believes price-conscious Indians refrained from buying regular quantum of jewellery due to an abnormal rise in gold prices. Overall, Icra sees a 6-8 percent fall in gold jewellery demand for the current fiscal FY2020.”

K Srikumar of ICRA said, “Gold jewellery demand has been subdued in the current year as the consumer sentiments were largely bearish and there was a rapid rise in the gold prices. The rural market which accounts for a large share of demand has been pretty bad hit due to the liquidity related issues and the crop realisations were kind of depressed.”

Two factors, which influence jewellery purchases, are disposable income levels and gold prices. US Fed rate cut, uncertainties over US-China trade talks and geopolitical issues attracted interest in global gold prices.

In the domestic markets, there are incremental factors like slowing economy, depreciating rupee and 2.50 basis points increase in the import duty all these factors which had lifted the prices up. "Directionally, we see gold prices are looking to hold at the current levels or even may firm up in the near term,” said Srikumar.

“Jewellery demand wise what we see is that at what levels consumers are willing to adjust themselves and commit on jewellery purchases. While consumers will hope for a price correction the fear over further jump in prices may push them to resume their jewellery purchases that we see currently,” he added.

In the coming year, consumer demand is expected to get a boost on the back of improving liquidity scenario and prospects of a recovery in the economy, said Srikumar.

"Our long-term outlook on the industry demand is still 6-7 percentage over the next five years.”

First Published:Jan 1, 2020 2:41 PM IST