Glitter loses shine in Kashmir amid skyrocketing gold rates

Srinagar, Apr 15 : As gold prices in the bullion market inch closer to the staggering Rs 72,500 mark per 10 grams, the demand for the precious yellow metal has plummeted in Kashmir.

This drastic fall has dealt a severe blow to gold dealers as well as consumers who once favoured the metal as an investment avenue. 2024 has witnessed gold making remarkable gains, becoming costlier by over Rs 7,000 per 10 grams so far. Such an exponential surge has raised doubts over the prudence of buying gold among Kashmiris, who have traditionally embraced it for its cultural significance and investment purposes.

While real estate is the preferred investment option in Kashmir, gold's escalating costs have diminished its appeal. Gold dealers across Kashmir report a significant drop in jewellery demand, attributing it to exorbitant prices. The current rate has crossed Rs 72,000 per 10 grams for 24 karats and is slightly lower for 22 karats.

"The demand for gold is on a downward trend, especially among upper-middle-class and middle-class families," said Ishfaq Ahmad, a local goldsmith. "Affluent households remain the primary buyers, leaving a substantial void in the market."

Historically, gold has played a pivotal role in Kashmiri families' wealth accumulation and has been an essential component during weddings and festivals. However, the recent price surge has disrupted this tradition, prompting families to reconsider their investments.

As the wedding season in Kashmir approaches, gold dealers and jewellers lament that the soaring prices are deterring prospective buyers. Bashir Ahmad Rather, President of the All Kashmir Valley Gold Dealers and Workers Union, expressed grave concerns about the dire state of the gold business in the region.

"The onslaught of soaring prices has significantly impacted demand, with families shying away from purchasing gold due to its high costs," Rather said. "While we hope the upcoming marriage season might boost demand and provide some relief, the current challenges and uncertainty regarding a significant price reduction persist."

Prospective buyers like Junaid Bashir have voiced their distress over the sharp increase in gold prices. Junaid shared his personal experience, stating that the cost of gold has nearly doubled in the last two years, posing a considerable financial burden on families, especially those preparing for marriage ceremonies.

On a national level, India's gold demand hit a six-year low in May 2023, excluding the COVID-19-affected year of 2020, with a 17% decrease in the March quarter compared to the previous year. The All India Gem and Jewelry Domestic Council (GJC) anticipates global economic uncertainties and geopolitical tensions to drive gold prices even higher, reaching an estimated Rs 72,000 per 10 grams in 2024, making it an attractive safe-haven investment and a hedge against inflation.

In just a single month, the price in Mumbai's Zaveri Bazaar has surged by nearly 10% to trade around Rs 72,000 per 10 grams. The Mumbai spot market has slipped into a heavy discount of $15-20 per ounce or Rs 400-550 per 10 grams since prices have risen sharply.

Gold prices in India exhibited an upward trajectory on April 15, maintaining resilience amidst the week’s fluctuations. The opening price for 10 grams of gold remained stable at roughly Rs 72,000. Pure gold (24-carat) traded at around Rs 72,540 per 10 grams, while 22-carat gold stood at approximately Rs 66,490.