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MOSL: EXPERT SPEAK (Retail): Gold demand trends encouraging; Correction and stability in gold prices add to buoyant consumer sentiment

EXPERT SPEAK (Retail): Gold demand trends encouraging; Correction and stability in gold prices add to buoyant consumer sentiment

 

Mr. Somasundaram PR; Managing Director, India – World Gold Council

Mr. Somasundaram PR has been serving as MD of WGC India since Jan’13. He has over 30 years of experience across diverse industries, including the FMCG and Banking sectors. He has previously worked with Lakshmi Vilas Bank, Standard Chartered Capital Markets, Standard Chartered Bank, Hindustan Unilever, and Tata Consultancy Services. 

We hosted Mr. Somasundaram PR, Managing Director, India – World Gold Council (WGC), and an expert on the Gold and Jewelry sector to understand the environment and trends for gold sector in India. The discussion revealed several insights: a) organized players are seeing strong sales performance, led by buoyant consumer sentiment, pent up demand, a shift in discretionary demand towards jewelry, and low gold prices; b) the outlook for the upcoming festivities and wedding season is strong, with jewelers stocking up inventory as represented by the surge in gold imports; c) a decline in gold volumes in recent years and WGC’s efforts to generate interest in gold among young consumers; and d) mandatory hallmarking, which would help consumers receive the right purity of the product and create a level playing field among jewelers.   

 

Recent gold demand trends are encouraging

• Most organized jewelers reported strong sales in the past few months due to: a) buoyant consumer sentiment, b) pent up demand of the last 1.5-2 years on account of the pandemic, c) savings from lower discretionary spends, and d) correction and subsequent stability in gold prices.
• The outlook for the ongoing festive and the upcoming wedding season is strong, led by: a) robust growth in gold imports as jewelers are building inventory, b) improving footfalls at jewelers, and c) rise in wedding gatherings.
• As per , gold imports had surged to 91t in Sep'21 from 12t in Sep'20. This indicates a strong recovery after the sharp decline in CY20 due to the impact of COVID-19.
• Further softening in gold prices may improve consumer demand.