The surge in gold prices over the last six weeks has pushed up the price of diamond- jewellery in India and crimped its demand. To bring down the rates and get customers back to buying, several jewellers have started using lower cartage yellow metal in their pieces.
In place of 18-carat gold, stores are now introducing diamond jewellery in 14-carat gold, hoping to keep prices in check for their aspirational customers. A similar shift is visible in the plain gold jewellery category, with many consumers now enquiring about 18-carat jewellery instead of 22-carat ones.
In the last one month, gold prices in India have shot up by 10.6%. On Thursday, it was Rs 73,333 per 10 gm in the retail market.
“Rising prices of the yellow metal have impacted the domestic demand for diamond jewellery,” said Kirit Bhansali, vice-chairman of Gem & Jewellery Export Promotion Council. “The diamond market was showing an upward trajectory till February. But as the price of the yellow metal started moving up, the domestic market went on a slow mode, resulting in demand plummeting by 15% in the last one-and-a-half months compared to January and February.”
To woo customers back, jewellers are now looking at 14-carat diamond jewellery. Kalyan Jewellers, a listed jewellery firm from south India, has started keeping 14-carat diamond jewellery. This is despite its lifestyle brand Candere selling 14-carat jewellery separately. It is also increasing its gold ornament offerings in 18-carat. Since the company is in a silent period, the top management of the company refused to comment on the development.
“Due to the gold price rise, consumers are buying gold jewellery for the purpose of investment and to hedge inflation and impact of further rise in gold price. There is a short-term dip in diamond jewellery demand in a few markets in India due to the safe haven status of gold,” said MP Ahammed, chairman of Malabar Group. “In fact, due to the rise in the gold price, there is an emerging trend among the jewellers to opt for 14 carat gold instead of 18 carat gold to craft diamond studded jewellery.”
According to Ahammed, 14-carat gold jewellery is more durable than 18-carat gold and can withstand the wear and tear of everyday wear. “We are strengthening the 14 carat gold diamond studded jewellery inventory at our stores to meet the demand,” he said.
Suvankar Sen, managing director & CEO of listed jewellery firm Senco Gold & Diamonds, said, “There has been a drop in diamond demand in March-April since footfalls have been affected due to a surge in the gold price. We have already introduced 14-carat diamond jewellery at our showrooms.”
While the gold content in 18-carat gold is 75%, it is 58% for 14-carat jewellery.
“There is a 17% difference between the two, which reduces the price of the diamond jewellery and is affordable to Indian consumers, who have an aspiration to a diamond piece which is pocket-friendly,” said Aditya Pethe, partner of Mumbai-based WHP Jewellers. Pethe said discussions are ongoing in the jewellery industry to introduce more 14-carat pieces.
Surendra Mehta, national secretary of India Bullion & Jewellers Association (IBJA), said, “A lot of innovation is happening in gold and diamond jewellery since the price of gold is moving up. In our country, only 14, 18 and 22-carat jewellery can be hallmarked. So there is no harm in buying 14-carat jewellery.”
Manufacturers and wholesalers of plain gold jewellery said they are flooded with calls from jewellers from Uttar Pradesh, Bihar, Haryana and Punjab for 18-carat jewellery.
“In the last one month we have received huge enquiries for 18-carat jewellery from these states,” said Saiyam Mehra, owner of Mumbai-based Unique Chains, a leading gold jewellery manufacturer.
