Indian jewelers hit pause as gold price rockets, buyers flee
What's the story
Gold and silver prices have hit a new all-time high in India, owing to rising geopolitical tensions and expectations of a rate cut by the US Federal Reserve. In Mumbai, spot gold was priced at ₹1.59 lakh per 10gm on Tuesday. Silver also saw a jump in its retail market value, trading at ₹3.42 lakh per kg. The continuous rise in gold prices has prompted jewelers to stop their bullion purchases.
Market impact
Bullion sales have fallen by 70%
Harshad Ajmera, MD of JJ Gold House, said, "Bullion sales have fallen by 70% as the gold price rallied more than 30% this month." He explained that jewelers are buying less because their requirements are being met through old gold customers are bringing in.
Consumer trend
Shift from jewelry to investment-led buying
Aksha Kamboj, VP of the India Bullion & Jewellers Association, noted a shift in consumer behavior. She said there's a transition from jewelry to investment-led buying in gold, such as bars, coins or gold-backed investment instruments. "Consumer demand is increasingly moving away from traditional lump-sum purchases and shifting toward buying digital gold," Kamboj added.
Price surge
Geopolitical tensions drive gold and silver prices
Analysts have pointed to renewed geopolitical tensions as a major catalyst for the rally in precious metals. US President Donald Trump's threat to impose 100% tariffs on Canada over a possible trade deal with China and his administration's decision to raise tariffs on South Korean autos, pharmaceuticals, and lumber to 25% have bolstered safe-haven demand.
Investor activity
First-time investors bolster gold and silver prices
A new wave of first-time investors, especially from Asia and Europe, is aggressively building their personal holdings of gold and silver. This has added structural support to the prices. In the international market, COMEX gold hit a new all-time high of $5,111 per ounce on Tuesday before settling near $5,067. Silver also reached its peak at $117.75 per ounce amid heightened geopolitical tensions and US-South Korea tariff threats.