Surge in gold prices triggers chain reaction, goldsmiths worst affected
Gold prices in India have surged by over 27% in just six months, reaching an all-time high in June and continuing to stay elevated through July. Between January 1 and July 16 this year, the price of gold rose by Rs 15,600 per sovereign (22K gold), a 27.27% increase. This follows a 21.67% rise in 2024, when prices climbed by Rs 10,184 per sovereign (22K gold) over the year. The pace of the current spike, experts say, is unprecedented.
"Even before people could get used to Rs 60,000 per sovereign, the price crossed Rs 70,000. That kind of rapid spike shrinks the market in a very real way," said B Sabarinath, president of the Tamil Nadu Jewellers Federation. He noted that business is currently running at just 40% of last year's levels. "Earlier, people purchased gold on auspicious days. Now, even a minor fall in rates becomes an occasion to buy," he added.
On peak days such Akshaya Tritiya, sales volume dropped to 70% when compared to last year, even though the overall revenue remained steady due to the higher price. Now, many retailers are stuck with unsold stock and tighter margins.
This slowdown has triggered a chain reaction across the gold sector. "When retailers don't get sales, they reduce orders. If we don't have orders, we don't send work to the goldsmiths," said Muthu Venkatraman, president of the Coimbatore Gold Manufacturers Association.
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