How India buys its gold

Mumbai-India (Dec 15)  Led by buying, by approximately 400,000 local jewellers, to cater to the demand for the wedding season, gold prices again went past the Rs 29,500 mark for 10 grams, peaking at Rs 29,665 in the bullion market. Weddings in fact constitute almost a fourth of gold jewellery purchases in India, followed by birthdays and religious festivals.

According to a report earlier this year by the World Gold Council (WGC), a one per cent rise in income level leads to a one per cent rise in gold demand. Close to three fourths of Indians own gold in some form or the other, compared to barely three out of five people in the US.

Expectedly, rural folks in India put a greater trust in gold as an asset than their urban counterparts, with many of them in the younger age groups preferring to spend their discretionary income on fashion and technology products than gold. In fact, the WGC report cites that if given Rs 50,000 to spend, only 33 per cent in the 18-33 age group will buy gold jewellery, compared to 42 per cent in the 34 & above age group.

Bridal jewellery dominates the market, with more than half of jewellery sold falling in that category.

Among every five jewellery items sold, four items would comprise bangles & chains, of not more than 20 grams.

BusinessToday