India’s relationship with gold is cultural and there is always some occasion around the year to buy the precious metal.
Nevertheless, a study by the World Gold Council (WGC) found wide variations in the pattern of demand and consumption from State to State, urban to rural and across demographies.
Some prefer chunky pieces, others like it light.
Weddings continue to be the primary driver of demand and India largely remains a 22-carat gold market.
However, those buying gold as fashion wear are seen settling for 14-carat pieces.
Here are five significant trends seen among Indian gold consumers:
Rural consumers like it plain: They show a pronounced preference for plain gold jewellery, while urban consumers are also likely to buy gold set with precious and semi-precious stones.
The WGC report notes that plain jewellery accounted for 88 per cent of purchases in rural India in 2015, while the corresponding figure for urban areas was 57 per cent. About 35 per cent of the gold bought in urban areas were gem set pieces.
Urban millennials less enamoured: Given ₹50,000, people in urban areas below the age of 33 are less likely to spend it on gold than those over 33 years.
According to the WGC report, just about 33 per cent in the younger age group are likely to buy fine gold jewellery, compared to 42 per cent in the older age group.
The younger group is also more likely to spend on designer and luxury fashion and smartphones. Rural India’s affinity with gold, in contrast, is strong across all ages.
South Indian brides are gilded: A bride from an upper middle class Kerala family is likely to be given 320 grams of gold jewellery on an average at her wedding, compared to 180 grams given to a Gujarati bride from a similar economic background and 190 grams for Rajasthani and Sindhi brides.
Brides from upper middle class families of Tamil Nadu and Andhra Pradesh are likely to receive 300 grams on an average.
Worn around the neck: Like loyalty, gold is worn mostly around the neck by both the sexes.
Therefore, chains and necklaces account for nearly half of the retail sales of gold. Bangles, although lighter than chains, account for 30-40 per cent of the retail sales of jewellery.
Income outweighs price: If income and prices both rise by 1 per cent, gold demand may still climb.
This is because with every 1 per cent rise in income, gold demand climbs by 1 per cent. But when prices rise 1 per cent, gold demand falls only 0.5 per cent.
That explains why gold demand increased from around 700 tonnes in 2000 to around 1,000 tonnes in 2010, despite a dramatic increase in gold price over the period, says WGC.
It is also seen that for a 1 per cent increase in inflation, gold demand increases by 2.6 per cent as investors turn to gold to protect themselves against inflation.