Industry Odisha Bureau, Oct 28: Gold has fallen sharply, yet India’s biggest jewellers are still holding back. Large chains are delaying purchases ahead of the festive season, Bloomberg reported. They are betting that the price drop has further to run. The caution reflects inventory strategy, not necessarily a collapse in consumer demand.
The insight comes from Samit Guha, chief executive of MMTC-PAMP India. The refiner is a joint venture of state-owned MMTC Ltd and Swiss refinery PAMP SA. Guha said big chains, which drive most sales, have not fully returned. Small and mid-sized jewellers are leading buying instead, some placing repeat orders.
According to the report, gold slipped below $4,000 a troy ounce last week. That was its lowest level since July. Bloomberg put the slide at about 24% since the US-Iran war began in late February. Prices had hit a record above $5,400 in January, it said. Domestic prices, however, also depend on the rupee, duties and local conditions.
Guha explained the logic behind the wait. Large jewellers usually buy aggressively when prices start rising, to lock in supplies. When they expect declines, they run down existing inventory instead. This protects working capital and limits losses on unsold stock. But it can weaken wholesale demand just before the busiest retail season. Not every jeweller follows the same strategy, as smaller players show.
Policy costs add another layer. The report said India more than doubled its gold import duty to 15% in May. A higher duty lifts domestic prices even when global rates ease. India imports nearly all the gold it consumes, which weighs on its trade deficit. Prime Minister Narendra Modi has urged citizens to limit gold purchases, the report added. Higher duties, it noted, have also pushed some buying into informal cash markets. Guha said the duty increase had affected the refiner’s purchases.
Timing makes the hesitation more striking. India’s gold buying typically peaks between October and December. Diwali, which the report places on November 8, anchors this demand. Weddings later in the season usually add further support. Citi Research also flagged weaker rural demand after El Niño-driven monsoon disruptions. Lower farm incomes can hit rural gold buying harder than urban purchases.
Citi expects India’s October-December imports to total about 106 tonnes. That forecast is roughly half the historical fourth-quarter average of 212 tonnes. Lower volumes may not mean an equal drop in import value, given price swings. China offers a contrast, with household demand picking up as prices eased.
MMTC-PAMP’s own sales are trailing last year, Guha said. September was roughly flat year-on-year, while October showed slight improvement. Buyers are favouring smaller coins and bars. Guha expects jewellers to return if gold rebounds. Until then, India’s festive gold market hinges on one question: how low prices go.
