Ashima Lahiri will say her wedding vows in December wearing fake earrings, necklaces and bangles that cost a tenth of the price of gold, breaking a millennia-old Indian tradition that brides wear the precious metal.
``Gold is too hot now,'' says the 25-year-old fashion designer from Kolkata, eastern India, who'll spend 15,000 rupees ($305) on her bridal set instead of 160,000 rupees for a real one. ``You can't touch it.''
Lahiri's not alone. Indian families, the world's biggest buyers of gold, are canceling purchases before the peak wedding season because prices have touched a record high in India, putting traditional bridal sets out of reach. That's spurred sales of gold-plated, silver and brass gem-encrusted jewelry, designed to match the bride's wedding saris.
``People are not willing to be victims of high gold prices and are instead going for glittering imitations,'' said Roli Malhotra, head of marketing at Sia Lifestyles Pvt Ltd., a 24-outlet chain of fashion jewelry stores based in Mumbai. ``Sales of imitation bridal sets are on the rise.''
Bullion, considered an investment haven, has weathered a global rout in commodities that has sent the Reuters/Jefferies CRB Index down 18 percent this month, the biggest fall in at least 52 years. In India, gold has gained 14 percent this year, reversing a 6 percent decline in the global spot rate, because a 20 percent slump in the Indian rupee against the dollar to a record low has driven up the cost of importing the metal.
`Double Whammy'
``It's a double whammy for Indian buyers and retail demand has been a casualty,'' said Bharath K. Rekapalli, director of Global Financial Markets, a trading and research firm, in the southern Indian city of Hyderabad.
Demand traditionally spikes in the second-half of the year, spurred by Diwali, the Festival of Light, which is considered an auspicious time to buy the precious metal by India's majority Hindu religion. Brides also buy more gold and relatives offer bridal sets as gifts for the trousseau as Indians prefer to get married in winter to avoid the monsoon rains and summer heat.
``Gold prices have put a cap on the number of sets I can buy for my daughter,'' said Rekha Makhija, 52, who will buy two instead of three collections for her daughter's wedding in January. ``While I plan to give her a few of my jewelry sets, it will be nice to buy something fashionable and trendy.''
The yellow metal is considered the best gift by relatives because it insures the bride leaves her family with her own property, said Ravi Jalan, director of New Delhi-based Jalan Commodities.
Family Vaults
Households in India have 15,000 tons locked away in family vaults, almost double the reserves held by the U.S. Federal Reserve, according to consultant McKinsey & Co. That's worth about $376 billion at current prices after gold has gained for seven straight years.
The increase is crippling Bipin Zaveri, 52, and his family's D.P. Zaveri showroom in Mumbai's 141-year-old gold bazaar.
``Many of us will be out of business if prices continue to prevail at current rates,'' he said. ``We don't expect customers to rush back just because it's wedding season.''
Indian families buy gold when prices decline and not necessarily when their daughters are getting married, said Zaveri, surrounded by glittering chains and rings in a showroom devoid of customers.
Changing trends have also reduced jewelry sales, Ramesh, who only uses one name, of R. Kothari & Co. Jewellers in Mumbai said. His revenue has dropped by almost 50 percent in the past two years, he said in an interview.
Chunky Jewelry
``No one wants chunky jewelry anymore and even if they do buy something heavy it's usually a gold set studded with precious gems or diamond,'' said Ramesh, pointing to a wall-mounted display-case with necklaces. ``Everything seems to be going against us.''
India's bullion demand was 769.2 tons of in 2007, less than the 1,000 tons estimated by the World Gold Council, as more families chose to rework their mother's or grandparent's bridal collections instead of paying for new gold.
``Every home in India has enough gold so if there is a wedding all they have to do is melt old jewelry and make new sets,'' said Daman Prakash Rathod, director at MNC Bullion Ltd., the biggest bullion dealer in southern India.
For bride Lahiri, she'd rather wear imitation jewelry on her big day than melt and destroy her great grandmother's necklace.
``Gold is considered a family heirloom and passed through generations, so why would I ever sell my family treasure?'' said Lahiri, who was in Mumbai to plan her wedding with her fiancée and friends. A gold bridal set her mother has given her doesn't match her wedding outfit, so she'll wear imitations.
``Everybody will notice how coordinated my clothes and jewelry are, and not really bother whether those earrings are fake or real,'' she said.
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