Indian Jeweller (IJ) Magazine August -September 2019

Policy & Market UPdate
Gold prices reach
rs 40,000 per 10 gram
Amid global growth concerns and
heightened trade tensions, gold
price crosses the Rs 40,000 mark
before Diwali. Typically, the demand for
gold reflects the expectations about the
future.The prices of the precious metal tend
to rise amid uncertain economic situations
or political upheaval.
Currently, the October contract of gold
was priced at Rs 37,995 per 10 gram on
the Multi-Commodity Exchange (MCX).
“Demand for the precious metal may
slow down slightly owing to some easing
in trade tension between U.S. and China,
but overall the trend is negative,” said Anuj
Gupta of Angel Brooking.
Gupta explained that the gold prices
were surging primarily owing to the decline
in global growth rate. Experts globally are
also suggesting investments in gold and
other precious metals amid these uncertain
times as an insurance against economic
uncertainty. “We now recommend all
investors have a full allocation to precious
metal investments in their portfolio. We
believe the bear market in gold has run its
course and a new bull market has begun,”
said a Gohring and Rozencwajg report.
Lower interest rate by central banks and
the ongoing trade dispute between the two
biggest economies, the US and China, were
supporting the gain in gold prices. Besides,
latest worry came over the recession
warning via bond market. The inversion
in the US bond yield hit levels last seen
in 2007, just ahead of the global financial
crises. This came even as the US decided to
defer the rise in trade tariffs it announced
earlier as major export market showed
renewed signs of weakness.
Indian gem and jewellery exports
touch $2.2 billion in July
Data released by India’s Gem &
Jewellery Export Promotion
Council (GJEPC) show that
overall exports from the gem and
jewellery industry dropped around 10
per cent year-on-year in July 2019,
reaching $2.22 billion.
Exports of cut and polished
diamond exports fell 18.29% year-onyear
to total $1.5 billion during the month, while gold jewellery (plain
and studded) exports were down 5.78% to total $963 million in July.
Rough imports during the month fell 34.24% to $1.1 billion. Imports of
cut and polished diamonds declined 14.42% to $114.01 million. Exports
of rough diamonds totalled $93.20 million in July 2019, compared to
$99.97 million in July 2018.
Exports of silver jewellery rose significantly, totaling $85.81 million in
July 2019, compared to $46.05 million in July 2018. Coloured gemstone
exports fell slightly to $18.14 million, compared to $18.52 million
exported during the same month a year earlier.
US-China trade war could give
impetus to Indian jewellery
manufacturing units
Simmering US-China
trade tensions could
nudge many global
jewellery majors to shift their
manufacturing base to India
from China. The relocation of
manufacturing facilities will
give a much-needed boost
to India’s gem and jewellery
exports, which fell about 10
per cent in the three months
to June 2019. Tighter lending
rules and higher borrowing costs in the nation as the fallout of a $2-billion
bank fraud last year have worsened the operating environment for the
business that contributes 15 per cent of India’s exports.
“Some major global players in gems and jewellery are pausing to rebalance
the business on account of the trade tensions,” Romesh Sobti,
Chief Executive Officer at Mumbai-based IndusInd Bank Ltd., said in an
interview. “The natural shift in the manufacturing business will be to
India from China.”
“Unless there is a favorable tax regime and ease of doing business, it
would be challenging for the industry to move from China to India,” Shah
said.
38 | august-september 2019 | INDIAN JEWELLER