MUMBAI/LONDON/SINGAPORE — In the world’s largest gold-consuming country after China, demand has just fallen off a cliff. Saurabh Gadgil, a sixth-generation jeweller, says it’s the worst year in India since he took charge of the family business in 1999. The 39-year old chairman of PN Gadgil Jewellers, which has stores in the country, Dubai and the United States, has offered discounts and freebies to lure customers.
“There’s not much you can do as the whole industry is suffering,” he said by phone from the city of Pune. A slump in prices has given jewellers a glimmer of hope before the Hindu festival of Diwali this weekend and Dhanteras on Oct. 28, the most auspicious day in the year to buy gold.
But consumption is still set to shrink to 650 tonnes in 2016, the smallest in seven years, according to a Bloomberg survey of five jewellers and traders. Indians bought 864 tonnes last year, a quarter of global demand, and a record 1,006 tonnes in 2010, World Gold Council data show.
“In my 33 years in the market, physical demand has never been this dead,” Marwan Shakarchi, chairman of MKS (Switzerland) SA, a Geneva-based refiner and trader, said in Singapore earlier this month. “It’s a sign the government is serious about cracking down on black money,” he said, referring to a campaign by Prime Minister Narendra Modi to curb undisclosed income.
While global prices have tumbled about 8 per cent from the highest in more than two years in July to $1,273.60 (U.S.) an ounce on Tuesday, they’re still up 20 per cent this year as central banks extend bond-buying and keep interest rates at low or negative levels in an effort to stimulate growth.
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