Gold Rush! Is the jewellery market set to shine bright this fiscal year?
ICRA expects the domestic gold jewellery consumption (in value terms) to continue its momentum in the current fiscal with an estimated growth of 14-18% Y-o-Y. This follows the sharp increase of 18% in FY2024, which was primarily driven by realisations even as volume growth was subdued.
A sharp 900 basis points (bps) cut in import duty in the Union Budget in July 2024 and consequent correction in gold prices for a brief period led to some pre-buying of jewellery as well as bars and coins during Q2 FY2025, which is generally a seasonally weak quarter. While gold prices were volatile, improving consumer sentiments and festive-led demand increased consumption in recent months. This, coupled with a higher number of auspicious and wedding days, and favourable monsoons aiding better rural output, is likely to help jewellery demand growth in H2 FY2025, in ICRA’s view.
Revenue growth for organised jewellery in FY2024 had been supported by realisations with gold prices rising by ~14% YoY. The same trend is expected to continue this fiscal as well. So far in the current fiscal, the average gold price has risen by a sharp ~25% vis-à-vis FY2024 average price, despite occasional corrections – first, after the cut in customs duty in late July 2024 and then in November 2024, following the US elections and currency movements. The evolving global economic and geopolitical scenario and rising investment demand for gold have stimulated the continuing uptick in gold prices for the last seven quarters.
On the supply side, organised
