Surge in Precious Metal Prices: A Chain at Rs 45,000, a Ring at Rs 38,000

Recent months have seen gold and silver reaching record prices, resulting in a significant increase in jewelry costs. Consequently, some consumers are purchasing less, while others are viewing jewelry as an investment, causing concern among jewelers.

The primary reasons behind the rise in prices of these two metals stem from their status as safe-haven assets, with gold and silver experiencing a notable increase due to geopolitical tensions and global economic worries. Additionally, central banks, particularly in China, have been buying gold while reducing their U.S. debt holdings to bolster their reserves in yellow metal. This is compounded by a trend of de-dollarization, with a decline in the dollar's use in international transactions in favor of local currencies, and a record global demand that is expected to exceed 5,000 tons in 2025, according to the World Gold Council. In the case of silver, its price surge is catching up to gold after a long period of undervaluation. As a strategic industrial metal, it is essential in key sectors such as electronics, semiconductors, batteries, and photovoltaics. This high demand, combined with a structural market deficit where global demand has outstripped supply for several years, is driving up its prices.

On Friday, gold and silver prices dipped following Donald Trump's announcement regarding the new Federal Reserve chair. The markets are wary of the potential nomination of Kevin Warsh, a former central bank governor viewed as more hawkish, which has strengthened the dollar and triggered profit-taking in precious metals. Consequently, gold saw a drop of over 6% on Friday, while silver fell nearly 15%, after achieving record levels earlier in the week, as reported by international press.

In interviews, jewelers and suppliers expressed the impact of rising prices on sales. Ratish Sooklaul, director of G. Sooklaul Bijou D’or, noted a 30% decline in jewelry sales due to ongoing price increases, compounded by new VAT regulations that have made jewelry more expensive. Customers are primarily purchasing for necessities such as engagements, weddings, or anniversaries rather than for luxury or pleasure. Meanwhile, there's been a rise in individuals seeing jewelry as an investment, with growth between 10% and 20%.

Dhilesh Neergheen, owner of Bijouterie D. Neergheen, reported that customers are struggling to afford gold jewelry due to soaring prices, leading them to exchange old pieces for new ones to limit their spending. Sadhna Sokhal, president of the Jewellery Advisory Council, pointed out that while some jewelers are closing, others are opening, indicating a mixed response to the situation. She emphasized that gold remains deeply embedded in Mauritian culture, with purchases for weddings and special occasions continuing, though consumers are adapting to buy less or invest strategically.

Furthermore, S. Ramjany, director of Silver Bar, highlighted that rising precious metal prices are affecting consumers’ purchasing power and the jewelry sector in Mauritius, shifting preferences from sets to individual pieces. He noted that as gold prices rise, so does VAT, exacerbating the price impact and pushing Mauritians to buy jewelry abroad instead of locally.

The overall situation reflects a complex interaction of global market dynamics, local cultural practices, and economic pressure affecting both consumers and jewelers in Mauritius.