In India gold traditionally signifies not just status, wealth and prosperity, but it is also considered to be an auspicious metal. Not just Indian households, but some of the temples have vast reserves of gold and if all this were to be put together and given to the government, then India could be the richest country in the world. The consumption of gold in India is increasing every year at an average of 18% per year. According to the cultural heritage of the country, gold is considered to be the best choice of precious metal when it comes to making jewelry and also investment. Due to rupee terms the price of gold is lower, and there are also the demands related to weddings and festivals which help in enhancing the demand for this precious metal. The jewelry consumption in the country is a huge 703 tonnes and it remains in the top position for gold consumption throughout the year for the second year.
South India and especially Tamil Nadu is the largest consumer of gold in the country and this is why the gold rate in Chennai becomes important. Even in the south of the country the demand and supply for jewelry is growing every year. The southern states of Tamil Nadu, Karnataka, Kerala and Andhra Pradesh hold around 40% of the country’s overall gold consumption. Here gold is mainly used for making jewelry although even South Indians are considering the importance of this precious metal as a means of investment.
Many temples in the South of the country are made of gold and also get huge offerings of gold from devotees. The investment in gold in this part of the country has risen to Rs. 2,440 crore in the year 2016 which is really a jump of 150% over the year 2015. The cost of gold has also increased by 27% as compared to the year 2015. When you compare this to other regions then the western region consumes 25-30%, the northern region consumes 20-25% and the eastern region stands at 10-15% gold consumption in the country.
You can witness the high growth in gold consumption in Tamil Nadu and rest of the south Indian states by the proliferation of jewelry showrooms, which range from large outlets to small traditional jewelry shops. This increase is partly because the tradition of buying gold for jewelry purposes is also now becoming a means of investment in the state of Tamil Nadu. This is why people in this region nowadays keep an eye on the gold rate in Chennai, because it affects the rate of gold in the rest of the region. The VAT is also as low as 1-2% on gold which affects the price of gold in Tamil Nadu and it is comparatively lower than the rest of the country. This has also led to the increased demand for gold in this state. The same is true for the rest of the southern region as well.
Then again the gold jewelry stores in the south also charge reasonable making charges. This also fuels the high demand of gold especially in Tamil Nadu thereby increasing the gold rate in Chennai. Although new trends in designs of gold jewelry are slowly becoming popular especially among the younger generation, but traditional designs and styles are still given preference. From early November onwards there is a rise of demand for gold in the country and especially in the South because people consider it auspicious to buy gold, during the Diwali festival and especially on the day of Dhanteras. The impact of depreciation of the rupee has led to the increase in the gold rate of Chennai as well as other parts of India, but this has not deterred the people of India from buying their favorite precious metal.
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