Surge in gold prices impacts consumer behaviour, affects middle-class families

Surging gold prices in Tamil Nadu impact consumer behavior, leading to cautious spending and innovative offers from jewellers.

The surging gold prices have significantly impacted consumer behavior, particularly among the middle-class families in Tamil Nadu, where the tradition of gold investment is deeply intertwined with cultural celebrations, especially weddings. As families prepare for upcoming nuptials in the month of May, June and July, many are adopting a cautious approach.

Jewellers on the other hand are making lucrative offers like lighter jewellery and full value for old jewellery, among other offers. On Friday, gold price stood at ₹9,765 per gram (24 KT) which means a sovereign (8 grams) was priced at ₹78,120.

V. Shantha, whose daughter is set to marry next month, said: “My daughter got engaged last year and at that time, the price of gold was around ₹6,800 per sovereign. We had committed to gifting her 21 sovereigns. But now with the increase in price, we are finding it difficult to fulfill it.” She said that this was not a dowry but a gift that she had promised her daughter.

“We have now informed our daughter that we will deposit money into her account instead,” Ms. Shantha adds.

K. Priyadarshini, a receptionist at a private firm who is set to marry in June, shared that her father had discussed the wedding jewellery with her, and she had suggested receiving cash instead of gold due to the fluctuating prices. She pointed out that another friend of hers, who will be getting married this year, is also facing issues managing money to purchase gold. As the price of gold the yellow metal continues to rise, more consumers are choosing the monthly installment plans offered by jewellers across the State to buy gold.

While consumers remain cautious and adopt a wait-and-watch approach, jewellers assert that despite rising prices, gold has consistently proven to be a reliable investment and a safe choice.

The bigger players in the space say that this is just a temporary phenomena and the festive season will be strong. However, the smaller players say that the middle and lower income groups will purchase only if there is a need.