Gold glitters less in Kashmir, soaring prices spark dip in demand

Srinagar, Jan 5: Gold, traditionally a go-to investment for Kashmiris, is experiencing a decline in demand as soaring prices make it increasingly unaffordable for many aspiring buyers.

Real estate has been a parallel avenue for investments in Kashmir, but the precious metal, which holds cultural significance, is losing its appeal due to its escalating costs.

Gold dealers in Kashmir report a significant drop in demand for jewelry, attributing it to the exorbitant prices. People seem to be adopting a wait-and-watch approach, hoping for a decline in prices before making purchases. The current cost of gold has crossed Rs 62,000 per 10 grams for 24 karats and is slightly lower for 22 karats.

According to goldsmiths and dealers in Kashmir, the demand for gold is still on a downward trend, especially among upper-middle-class and middle-class families. Affluent families are the primary buyers, leaving a substantial gap in the market for the precious metal.

Historically, gold has held a crucial role in Kashmiri families' wealth and has been an essential item during weddings and festivals. However, the recent surge in prices has shifted the dynamics, causing families to reconsider their investments.

Bashir Ahmad Rather, the President of the All Kashmir Valley Gold Dealers and Workers Union, expressed concern about the dire state of the gold business in Kashmir. He mentioned that the onslaught of soaring prices has significantly impacted the demand, with families shying away from purchasing gold due to its high costs.

Rather highlighted the hope that the upcoming marriage season might boost the demand for gold, providing some relief to dealers and artisans in the region. However, he acknowledged the current challenges and the uncertainty regarding a significant price reduction in the near future.

Local residents, like Ajaz Ahmad, voiced their distress over the sharp increase in gold prices. Ahmad shared his personal experience, stating that the cost of gold had nearly doubled in the last two years, posing a considerable financial burden on families, especially those preparing for marriage ceremonies.

In May 2023, India's gold demand hit a six-year low, excluding the COVID-19 affected year of 2020, and recorded a 17% decrease in the March quarter compared to the previous year.

The global economic uncertainties and geopolitical tensions are anticipated to drive gold prices even higher, reaching an estimated Rs 70,000 per 10 grams in 2024, making it an attractive safe haven investment and a hedge against inflation, according to the All India Gem and Jewelry Domestic Council (GJC). The council's chairman, Saiyam Mehra, emphasised gold's role as a vital portfolio hedge during economic downturns, predicting a surge in prices due to global factors.