Jewellery retailers witnessed a 20 per cent increase in the sale of ornaments during the last fortnight. The rise was due to more consumer footfalls following a 1.6 per cent correction in prices.
Gold prices plunged to Rs 20,380 per 10 gm in Mumbai, declining Rs 325 from the high of Rs 20,705 per 10 gm two weeks ago.
Globally, however, gold prices fell by nearly $48 during the period from $1,423 an ounce to $1,375.45 an ounce.
The fall boosted consumers' sentiment. Consumers have realised that gold prices will remain upbeat until the US economy shows significant recovery resulting in its currency's growth against global peers, said Vinod Hayagriv, chairman of All India Gems & Jewellery Trade Federation.
Traders believe any further decline in prices would attract more consumers to shop for wedding and festival season ahead.
Generally, the wedding season starts in India around the third week of November and with the beginning of this season, gold jewellery demand commences. But, sales of retail jewellery were dim until the first week of December, due to high prices.
"Sales will increase further if prices fall below Rs 20,000 in India," Hayagriv added.
The nature of jewellery sales in the south is different from that of the north. There is a lull on in the south since the last one month.
Sales have been steady due to the lack of any seasonal spark. But, the north is compensating the poor demand of the south, said Hayagriv.
Gold jewellery demand continued to outshine investment products even during the last quarter of the current financial year.
Traders say gold's sale as an investment product has slightly moderated due to high prices. Investors see little opportunity ahead in the yellow metal.
Meanwhile, the global independent precious metals consultancy GFMS has forecast gold prices to peak above $1,500 an oz and silver to trade higher than $30 an oz comfortably next year.
Assuming the forecast proves true, as has been in the past, gold and silver prices will translate into Rs 22,500 per 10 gm and Rs 42,000 a kg respectively.
During the third quarter of the current calendar year, average gold prices rose 44 per cent in dollar terms and 105 per cent in rupee terms.
On achieving this forecast, gold's demand in India, the world's largest consumer, may decline, said a trader.
India's gold imports during the current calendar year are likely to surpass all previous records with arrival surpassing 750 tonnes in the first nine months of the current year.