India shifts from gold to hot diamonds

In a seemingly difficult transition, Indians are trying to reduce their fascination with gold. In the past, in wealthy families, parents usually gave the bride gold as a gift. And now, they have found a substitute - diamonds.

India has always been one of the largest gold consumers in the world. However, according to the World Gold Council (WGC), China's gold demand is expected to exceed 850 tons this year, while India's demand for the same period is about 650 tons to 750 tons.

As of the second quarter, demand for gold jewelry in India plummeted by 30% year-on-year. Some wealthy Indians have begun to adjust their consumption concepts. They are no longer just interested in gold.

Stephen Lussier, CEO of Forevermark, stated that “India has become De Beers’ fastest growing market and the company’s most important market.” The eternal imprint belongs to the De Beers Group, which is the largest in the world. Diamond supplier.

In fact, during the past few years, De Beers aimed at the wedding market in India. Lussier said, "Before De Beers officially entered India, the locals only love gold jewelry. Now the company will spend 4 million to 5 million US dollars in the Indian market each year. The ultimate return is 20% to 30% of annual sales growth. According to reports, De Beers’ competitors include Tanishq, a local Indian diamond trader, which monopolizes major cities such as Mumbai and New Delhi.

Why do Indians suddenly turn to diamonds after years of enthusiasm for gold?

According to reports, the Indian rupee depreciated by 1% against the US dollar this year, and depreciated by more than 13% last year. However, the spot price of gold has risen 24% since the beginning of last year. Since gold is priced in U.S. dollars, this means that if it is measured in Indian rupee, it costs 635,15 rupees to buy an ounce of gold at the beginning of last year, but now it needs to pay 47% more.

When gold becomes more expensive, the price advantage of diamonds is revealed. According to the Rapaport Diamond Exchange Index, the average price of 1 carat diamond fell by 18% year-on-year in the second quarter of this year. If converted to U.S. dollars, diamonds for 1 carat now cost $8384, compared with $9175 last year.

The reporter found that the Dutch bank's polished diamond quotation found that as of October 10, the highest purity was IF, and the highest color grade of D was 1 carat diamond for $17,100. It has fallen by 15% since the beginning of this year, but it has accumulatively increased by 59% since January 2002.