Record-high gold prices are having an effect on jewelry sales in India during the country's main festival season. The precious metal's luster has not dimmed in India, the world's Number one gold buyer.
At a plush jewelry shop in an up-market area of India's capital, there are no customers, although the Diwali festival is just a week away, on November 1.
Demand for gold in India normally picks up in October, with the beginning of the festival and wedding season. Business peaks during Diwali, the Hindu festival of lights.
This year, however, retailers like Gautam Chawla of Nathumal Jewelers say many customers stayed away, as the price of gold surged past $440 an ounce, its highest level in nearly two decades.
"It is during this season that you see a sudden up-scale in sales ... that is [now] missing," he said. "If a person has to ... buy it [gold] for marriages, or something, it is another reason altogether, but impulsive buying or general buying has been really affected by the higher prices."
That does not mean India's voracious appetite for gold has dipped. In the first six months of this year, gold consumption was nearly 50 percent higher than the same period last year. India purchases more than 800 tons of gold a year, about 20 percent of the entire world total.
As in many other Asian countries, India's passion for gold is largely driven by culture and custom. Golden ornaments are a traditional wedding present for brides to ensure financial security and a gift of the precious metal during Hindu religious festivals augurs good fortune.
The head of the World Gold Council in India, Sanjeev Agarwal, is confident that, in the long run, high prices will not diminish Indians' passion for gold.
"The Indians are very, very cued on to gold prices, and that spans across all income levels, all urban and rural markets. ... In that context, if the perception is that the gold prices are going to remain strong in years to come ... [then] the demand for gold will continue to remain strong," he said. "There could be slight gaps, in which there is a wait and watch [period], because gold prices in the last two or three weeks have moved up relatively fast."
Gold is not just being shaped into ornaments. Mr. Agarwal says middle-class Indians, whose incomes are rising steadily, are choosing gold as an investment option. Growth in this sector is even faster than in the jewelry sector.
"Gold coins and bars' demand has grown phenomenally," continued Mr. Agarwal. "And, for the first time in India, we have been seeing the banking sector developing and retailing gold coins and bars across their branch network ... so, we are developing new channels of distribution and new categories of customers."
A large part of this demand comes from smaller towns and cities, where many people are not comfortable investing in stocks or mutual funds.