Rising gold prices hit gemstone sales.

KOLKATA | AHMEDABAD: The gemstone industry feels the heat of rising gold prices as sales drop by 15-20% due to customer resistance. Gemstone traders are worried as expensive imports are finding no takers. Gemstones are imported to India in rough forms which are polished here and are either exported or sold in the domestic market.

Latest figures show that India imported rough coloured gemstones worth Rs 135.29 crore in May 2012 as compared to Rs 57.52 crore in the corresponding month of the previous fiscal. However, import of rough diamonds declined marginally to Rs 6,181.74 crore in May 2012 as compared to Rs 6,376.76 crore in May 2011.

"The demand for gemstone has been low in the last two months as gold jewellery demand has dropped by 15-20%. Coloured gemstones are used to give a fashionable look to jewellery. Since gold demand has plummeted, it has affected the overall sales of coloured gemstones. Gemstone prices have risen as imports have become costlier due to a weak rupee," said Bachhraj Bamalwa, chairman of All India Gem and Jewellery Trade Federation.

The export market is also not looking up. In fact, the biannual auction of gemstones held by Gemfields, a company listed on London Stock Exchange's Alternative Investments Market, in Jaipur this June may be a pointer. Only 3.47 million carats out of the 10.85 million carats on offer found takers.

For the rest, even the minimum reserve bid could not be reached. The total mop-up, too, was lower than in the earlier auctions - at $9 million, as against $11 million in November 2011 and $9.9 million in March 2011.

Source : economictimes.indiatimes.com