Tue, Aug 28, 2018 - Page 10 News List

India floods might hit gold demand


A man and his dog sail past a bicycle hanging from a tree in flooded Alappuzha in India’s Kerala State on Monday last week.

Photo: AP

Jewelers in India’s biggest gold-buying state expect sales to drop during the peak festival and wedding season after heavy rains and floods caused more than US$3 billion of damage.

The usual purchase of 200g to 1kg of gold per wedding in Kerala State might halve in the next month, All Kerala Gold & Silver Merchants Association president B. Govindan said in a telephone interview.

The death toll in Kerala has climbed to at least 370 since the monsoon started in June and nearly 1 million people have taken shelter in relief camps.

The state’s other major industries, including tourism and rubber, are also expected to be affected, while coffee production is facing a 21-year low.

In India, the monthly per capita expenditure on gold ornaments was the highest in Kerala at nearly 400 rupees (US$5.7), according to the Indian Ministry of Statistics and Program Implementation’s 2011-2012 survey.

The country’s key festival and wedding season runs from the end of August to December.

About 60 to 70 percent of jewelry manufacturing in the state has been affected, as many factories are flooded and workers are not able to go to the workshops, Govindan said.

“Supply is limited,” he added.

While it is too early to gauge the effects on the full season as the waters recede and relief and rehabilitation efforts begin, demand should remain dull for at least the next two weeks, said Asher O, managing director of the Indian operations of Kerala-based jeweler Malabar Gold and Diamonds, which has 35 stores in the state.

People in affected areas would change their priorities from jewelry purchases to rebuilding their homes and casual buying of gold will slow, he said.

“People’s focus will be to bring their lives back to normal,” Asher said.

The All India Gems & Jewellery Trade Federation, which is a top industry body, has been in contact with jewelers in Kerala and representatives plan to travel to the state this week, chairman Nitin Khandelwal said.

The visit is aimed to provide the bullion industry whatever help it requires, mainly with labor, he said.

Some of India’s biggest jewelers, such as the Warburg Pincus LLC-backed Kalyan Jewellers India Ltd, Joyalukkas Group, and Malabar Gold and Diamonds, are based in the southern state.

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