Gold Prices To Rise, Natural And Lab-Grown Diamonds To Coexist: Jewellery Body Chairman

Representative image. (Source: Unsplash)

Gold—as an asset class—will see good returns in 2024, while lab-grown diamonds and the natural ones will coexist in the future, according to Vipul Shah, chairman of the Gems and Jewellery Export Promotion Council.

"With natural diamonds, there is an aspiration, whereas lab-grown diamonds are for affordability, and for fun and fashion. So, it's a completely different segment... It is not going to be that one is going to take over the other," he said while speaking on the sidelines of the apex body's jewellery show on Thursday.

Lab-grown diamonds are for a segment of people who desire to buy the natural ones but are not able to, he said. "Natural diamonds are for those who have a desire for diamonds and they're getting diamonds. Also, if you are looking for investment, you will choose natural diamonds. So, the idea is that once first-time buyers start with lab-grown diamonds, they will aspire to buy natural diamonds. So, in the end, both will coexist," said Shah.

Also, natural diamonds will gradually lessen in supply, with less mining and no new mines coming up. Both are for different consumer bases and both are going to complement each other, he said.

According to him, gold markets are looking bullish and he expects them to trade in the range of Rs 65,000–70,000 very soon.

Vipul Shah, chairman of the Gems and Jewellery Export Promotion Council. (Source: GJEPC)

Edited excerpts from the interview:

What domestic and international demand trends do you expect for the gems and jewellery industry in the coming year?

Vipul Shah: FY23 was a slow year as far as exports were concerned. At the same time, the domestic market was very robust and people were looking forward to the festive season as well. Gold also was playing a major role with rising prices. That also boosted the confidence of the consumer.

On the exports side, demand has slowed down comparatively. The U.S. is a major market for us and because of high interest cost, consumer spending there has gone down a little bit, but there are encouraging signs. Thanksgiving numbers were comparatively much better, along with Christmas as well.

We are seeing some demand starting from the Special Economic Zones as well in the month of November and December. So, that's a good sign and I personally feel that U.S. will start buying and diamond exports should start picking up.

China was slow and post-Covid, they have not opened up. Now, we are hopeful that after the Chinese New Year, they will also start investing in the way they are investing into gold.

So, overall, yes, gold markets are looking bullish. I personally see that in 2024, gold would be an asset class where we'll have good returns. The current price is trending at about $2,035 and I personally feel this year, we'll see gold going towards that $2,200-2,215 (level) in dollar terms and in the range of Rs 65,000-70,000 very soon.

The reason is not just aspirations to buy gold, but also because of de-dollarisation and geopolitical risks. There is volatility in gold prices currently. So, consumers will wait for gold prices to stabilize and then buy at the new price. So, we should start seeing growth from here, while remaining cautious on how geopolitical risks and elections play out.

How has the festive demand in India been and how's the wedding season for the gems and jewellery industry shaping up?

Vipul Shah: Fantastic... Domestic market was very, very robust. We have seen a huge festive demand in Diwali. We have seen huge destination weddings taking place in India. So, that is helping the economy. So, overall, I am seeing a huge potential. Huge growth taking place, as far as domestic market is concerned, with further room to grow. Retailers, I am talking to, are in the mood to grow. India is looking very promising.

You touched upon multiple large development infrastructure projects coming up in the jewellery space, like the new SEEPZ facility. Tell us a little bit more about what's happening.

Vipul Shah: In SEEPZ, we have a mega common facility centre that's coming up. It will house state-of-the-art equipment and auditoriums. This is a project where the government has invested in a huge way.

There is also a jewellery park coming up in Mahape (in Navi Mumbai) on 20 acres of government allotted land. It will be launched in April and be completed in three years, and will be among the best in the world. The idea is to bring all jewellers of the country into this one big hub and showcase India as the world's best jewellery destination.