Source: AFP
Surrounded by glass-fronted display cases filled with glittering gold bangles and necklaces at London’s Pakeeza Jewelers store, manager Zahid Khan laments the impact of record high prices for the precious metal.
“People are obviously not buying as much as before,” Khan told AFP as his sales staff weighed gold necklaces and tapped calculators, adding that there had been a “big increase” in prices.
Pakeeza is located in east London’s Green Street jewelery district, a popular destination for the Asian community, while nearby shops also sell traditional clothing such as abayas and saris.
Gold products, also including rings and other trinkets, are a traditional gift for births, weddings and other family celebrations because the precious metal is seen as an inflation-proof investment that will stand the test of time.
However, the recent rise in gold prices — fueled by haven demand amid geopolitical tensions and the prospect of a U.S. rate cut weighing on the dollar — has weighed on the jewelry market.
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System shock
“When you see rapid jumps in gold and things like that, yes, there is a shock in the system,” said Vikram Santilal, owner of Jeram Jewellers.
“So the quantity has decreased, but the budgets have increased,” he told AFP.
A few years ago, customers could buy 200 grams of gold for £2,000 ($2,500) — but now buy just 100 grams and it will cost between £6,000 and £8,000.
“The high prices kind of put me off buying, and I’ve saved a lot of time,” said customer Mariam Lunat, 57, who had just bought gold bracelets to give to her daughters as wedding gifts.
“I bought less quantity. Yes, I would like to buy… two of each, but I have only bought one.”
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The price of gold has jumped 13 percent since the start of 2024 and hit a record high of $2,431.52 an ounce, equivalent to about 30 grams, in mid-April.
For jewelers, the worst aspect is price volatility because customers watch the market and wait for prices to drop before going shopping.
Price knowledge
Khan added that most Green Street jewelers “work day in and day out” to calculate their own product prices based on the morning gold price fix published by industry body the London Bullion Market Association.
This pricing system is essential to the global jewelry trade, particularly in the world’s two largest markets: China and India.
“It’s very normal for an average Asian family to know what the price of gold is today… It’s like finding out how much a liter of petrol is,” Santilal explained to Jeram Jewellers.
“Everybody knows that, because if you have a car, you know what a liter means. An average Asian family really knows what the price of gold is. So they’ll discuss these things in social circles.”
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Overall gold demand fell five percent in the first quarter year-on-year as it became too expensive for some, according to data from the World Gold Council. Demand for jewelry fell by two percent.
Green Street stores specialize in 22 carat gold products, giving each product a bright, subtle golden hue.
This high concentration leaves jewelers exposed to daily fluctuations in the market for the precious commodity, which accounts for 75 percent of the retail price.
This is in stark contrast to classic luxury brands such as Boucheron, Cartier and Van Cleef, where prestige is much more influential.
Hidden gem
Green Street’s clientele consists mainly of people whose families come from Afghanistan, Bangladesh, India and Pakistan, as well as Middle Eastern countries.
PureJwels, another store on Green Street, specializes in more high-end products that have relatively high design and manufacturing costs.
Boss Jayant Raniga tweaks his prices every month because his product brand is less exposed to the gold market.
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“We were a bit concerned in April when the price peaked… but overall customers appreciated the stability we provide as a brand.
“And it didn’t really affect our overall volume.”
“Green Street has become the shopping destination for customers who want to do their wedding shopping in South Asian style,” he told AFP, adding that it was a “hidden gem” of the British capital.
Source: AFP