Leading jewellery stocks extended the positive momentum for the second straight day and rallied up to 4% on Monday, Aug. 24 tracking a sharp rise in gold prices. Shares of Senco Gold, PC Jeweller Ltd., Kalyan Jewellers India, Thangamayil Jewellery, and others, gained amid heightened investor interest in the sector. The rally in jewellery stocks was supported by the sharp upmove in gold prices, which boosted sentiment towards companies operating in the precious metals and jewellery segment.
Shares of PC Jeweller Ltd. rallied over 5%, while Senco Gold share price also jumped over 5% intraday. Kalyan Jewellers India shares advanced more than 2% and Thangamayil Jewellery shares jumped 3% after the opening bell. Notably, according to the FTSE rebalancing review, Thangamayil Jewellery Ltd. will likely see solid inflows during the September index rejig.
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Jewellery stocks: What's driving the rally?
Gold prices in Indian on the Multi Commodity Exchange (MCX) traded higher on Monday, following gains in international bullion prices, amid a weak US dollar. MCX gold rate for October futures contracts traded higher by Rs 908, or 0.56%, at Rs 1,63,346 per 10 grams. In the global markets, gold prices hit their highest levels in more than three months. Investors now await key US inflation data and a speech later this week by US Federal Reserve Chair Kevin Warsh.
"Gold and silver continuing to trade at elevated levels reflects the strength of the underlying bullion market, supported by positive global cues and healthy spot demand''. The current price of gold and silver levels highlights the sustained investor confidence in precious metals, even at higher price points, according to Darshan Desai, CEO, Aspect Bullion & Refinery.
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From the bullion industry's perspective, the key trend is the resilience of physical demand alongside strong investment interest. Higher prices are encouraging consumers to become more selective, with greater preference for lightweight jewellery, coins and smaller-ticket purchases, according to the analyst. Jewellery stocks are witnessing buying interest as sharp gains in gold prices improve the value of inventory and support revenue growth for organised players.
''As we move closer to the festive and wedding season, we expect physical demand to remain supportive, although market participants will need to navigate higher price volatility and manage inventory carefully. The broader outlook for bullion remains constructive, with gold continuing to serve as a store of value and silver gaining traction on the back of both investment and industrial demand,'' said Desai.
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