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Gold Body Sees Latent Jewelry Demand in India

Jan 24, 2017 4:47 AM   By Rapaport News
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 India’s growing middle class is driving gold jewelry demand in the country but urbanization is causing a shift in buying trends among consumers, according to the World Gold Council (WGC).

“Given India’s growth trajectory, per-capita income will continue to rise, millions more will be lifted out of poverty and its middle class will continue to grow,” the council said in a special report on India. “This will underpin growth in consumer demand.”

Some 200 to 250 million people make up India’s middle class, with the number expected to double by 2025, the report cited the National Council of Applied Economic Research as saying. A rise in income levels generally translates to a proportional spike in gold demand, the WGC explained.

Given India’s strong gold-buying tradition, the levels of jewelry ownership are significantly higher in rural areas than in the cities.

While rural India’s affinity for gold spans all ages, the discrepancy is most apparent among the younger generation living in the cities. The research showed that 33 percent of Indians aged 18 to 33 are inclined to buy gold jewelry compared with 42 percent for those older than 34.

“For some urban dwellers gold is competing with designer and luxury fashion and the ubiquitous smartphone,” the report stated. “But the risk is firmly at the margin: young Indians still buy gold.”

That means retailers must acclimatize to young Indians’ needs, developing online strategies to engage with them and to capture the large proportion of the general population that intends to make purchases this year.

A survey carried out by TNS revealed 55 percent of respondents bought gold jewelry in the past year, and 51 percent intend to make a purchase in the next 12 months.

Weddings are the most important gold-buying occasion, followed by birthdays and religious festivals, the research showed. For those occasions, rural Indians tend toward plain gold jewelry, while gold set with precious or semi-precious stones is more popular in the urban areas.

However, WGC foresees an opportunity in the investment space, particularly with gold bars and coins gaining popularity in the cities.

“Our consumer research indicates there is large, unmet investment demand,” the WGC said. “In the absence of any barriers, Indian consumers would invest more in bars and coins, jewelry, and other gold-backed financial products.”

In an earlier report, the WGC said the government's demonetization policy would impact demand in the short term, but the shift to transparency and formalization of the economy will benefit the market in the long term.
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Tags: diamonds, gold, Jewelry, Rapaport News, World Gold Council
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Jan 24, 2017 9:03AM    By Jigar J
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