Mehra sees ₹1.54 lakh per 10 grams on MCX as a good level to buy, although prices could temporarily fall by ₹500-700 from current levels. “Temporarily, $10 to $20 or $30 the rate can reduce, or maybe Rs 500-700 down from these rates. But overall, in the coming 15 days to 30 days, the gold rate will slowly keep on increasing,” he said.
He expects jewellery demand to improve after a relatively weak three-month period, with Raksha Bandhan, the September festive season, exhibitions and the wedding season likely to support sales. Mehra said volumes could remain similar to last year, although higher gold prices are expected to increase the value of sales.
The recovery is already visible in jewellery orders, according to Mehra. He said manufacturers have received a large volume of orders over the past 15 days, with jewellery now moving back to retailers. He expects the next three months to be positive for the gems and jewellery industry.
Consumers, however, are adjusting to higher gold prices by buying lighter and lower-carat jewellery. Retailers are seeing stronger demand for 9-carat, 14-carat and 18-carat jewellery, while lightweight sets below 40 grams and longer sets below 60 grams are selling well. Eighteen-carat bridal jewellery is also seeing strong demand.
“The number of buyers has increased, not the single buyer buying more heavier jewellery,” Mehra said.
Demand is also improving for diamonds and silver, while jewellery exchanges are gaining momentum as consumers trade old jewellery for new designs. Mehra said retailers are encouraging exchanges by offering discounts to customers who bring in old jewellery.
The export market is also showing signs of improvement, with demand picking up in Australia and the UK, while the US market is recovering. Mehra said easing geopolitical tensions in the Gulf are also helping jewellery shipments move through Dubai to other markets.
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Another potential opportunity is the recycling of old gold held by Indian households. Mehra estimates that households have more than 30,000 tonne of old gold, and even if 0.5% of this stock is recycled, it could bring around 250-300 tonne of gold back into circulation.
The industry has also made representations to the government on the gold monetisation scheme, with Mehra expecting some positive developments over the next one to two months.
