Jewellery stocks affected by rising gold prices

Gold prices have jumped 17% in the past three months, impacting jewellery stocks in different ways. Higher gold prices can increase profits for jewellers, but they may also lead to less demand from consumers. Investors are encouraged to consider companies with strong management and protective strategies against price changes. The rise in gold prices this year has been influenced by concerns about the U.S. economy, tariffs, the dollar's decline, and strong retail demand. Currently, gold prices are at a record high, leading to increased interest in jewellery stocks. However, the relationship between gold prices and jewellery stocks is complicated. While a short-term spike can benefit jewellers, sustained high prices could result in fewer customers willing to buy. Despite the surge in gold prices, some jewellery stocks have fallen. Companies like Titan, PC Jeweller, Kalyan Jewellers, and Senco Gold have all seen significant drops. Experts maintain a positive view on the long-term outlook for jewellery stocks, particularly in India where gold holds cultural importance for weddings and festivals. Narinder Wadhwa from SKI Capital Services noted that steady demand for jewellery remains strong, even with rising prices. Wadhwa also mentioned that higher gold prices can improve profits for organised jewellers, who manage their inventory well. As more consumers choose organised retailers over unorganised ones, listed jewellery companies may see growth. In contrast, Ajit Mishra from Religare Broking warned that rising gold prices could lead to weaker demand in the mass market, as consumers may delay purchases. He recommended that investors focus on companies that manage their gold exposure effectively. For potential investments, Wadhwa suggested Titan Company due to its strong brand and presence. He is also optimistic about Kalyan Jewellers and Senco Gold. However, some experts caution that high gold prices may limit overall jewellery purchases, making it essential to take a careful approach. Shreya Hanchate from Bonanza Group advised diversifying investments and considering companies with solid market standings like Titan, Kalyan Jewellers, and Thangamayil Jewellery.