MUMBAI: (Commodity Online): India is witnessing a huge rise in diamond sales this Diwali with around 35 per cent rise this year. Reason for this huge surge in Indian domestic diamond sales is the high prices of gold.

Gold is almost at record levels with prices crossing Rs 16,000 per 10 gm mark this week.

So, diamond sales in India are increasing due to volatile gold prices. To add to that is the sparklers are now cheaper than the 2007 level. Due to the slump in markets in 2008-09, diamond prices crashed and that helped customers to get their dreams of possessing diamond jewellery realized.

Around 25 per cent of people who purchase gold for social gifting have drifted to diamond. Again, this move also helped gold. Because, diamonds are set on 18-carat gold instead of 22-carat gold with which gold ornaments are usually made. On a diamond-studded ornament, the gold used is of lesser in purity and of lower price.

So, jewellery shop owners expect strong sales (of gold ornaments) because it is the festival season and the marriage season will soon follow, and in India people buy gold on these occasions.

The spectacular rise in diamond sales, especially after certified diamonds came into the market, would also help push sales of gold jewellery. Diamond is helping in selling gold as it is studded on jewellery.

Diamond sales are very healthy, about 30-35 per cent more than last year. But, overall, according to professionals in the trade, though sellers of gold would likely earn more than last Diwali — given the higher price of the metal — volumes sold were likely to dip.

Gold price has more than doubled in the past four years and is now hovering around Rs.16,000 per 10 grams. It was between Rs.12,000 and Rs.14,000 around this time last year.

According to World Gold Council data, total demand in the country plunged 83 per cent to about 18 tonnes in the first quarter, as compared to 107 tonnes registered in the corresponding period last year. India is the world’s largest gold market.

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