Gold Investment By GenZ: Why Govt May Make Hallmarking Mandatory On 9 Karat Gold Jewellery?

Gold Prices: Genz finds buying 18K, 22K, and 24k gold jewellery expensive, and is likely having an appetite shift towards much lower karat gold jewellery. That is why, as per media reports, the government is likely to make hallmarking mandatory for 9-karat gold jewellery in India.

Currently, gold prices in 22K, 24K and 18K range between Rs 54,000 to Rs 73,000 across many cities of India. And since the gold market has shown resilience in uncertain macro conditions, escalating geopolitical tensions, and a volatile market in 2024 so far, the prices of the yellow metal are already at high levels, making it expensive for Genz (young generations of the latest times) investors to buy.

On September 3rd, in cities like Mumbai, Chennai, Kolkata, Bangalore, Hyderabad, Kerala, and Pune - the 22K gold is at Rs 66,700 in 10 grams, while 24K and 18K of the same is at Rs 72,770 and Rs 54,640 respectively. In the national capital, Delhi, gold price is at Rs 66,850 per 10 grams in 22K, Rs 72,920 in 24K and Rs 54,700 in 18K.

That being said, the price of 9-karat gold jewellery will technically be cheaper compared to higher karats.

Two persons told LiveMint, that the order is expected to be issued in a few months, following a final round of consultations with all key stakeholders, including organizations representing gold jewellery traders. The consultation is scheduled to be held on Tuesday.

Further, the sources revealed that as part of this initiative, an instant certificate of purity will also be issued for 9 KT gold items at the time of purchase.

Another reason for making hallmarking mandatory in 9 karat could be the rising crime of low-karat gold jewellery. Latest data from National Crime Records Bureau (NCRB) revealed that chain-snatching incidents in India soared by 32.54% to 9,278 in 2022, compared to 7,000 in 2021.

At present, mandatory hallmarking regime covers six caratages of gold jewellery/artefacts viz. 14, 18, 20, 22, 23 and 24 carats as mentioned in the Indian Standard IS 1417-Gold and gold alloys, jewellery/ artefacts - fineness and marking -specification.

Why hallmarking is important for gold and jewellery?

Hallmarking is the accurate determination and official recording of the proportionate content of precious metals in precious metal articles. Hallmarks are thus official marks used in many countries as a guarantee of purity or fineness of precious metal articles.

The principal objectives of the Hallmarking Scheme are to protect the public against adulteration and to obligate manufacturers to maintain legal standards of fineness. In India, at present two precious metals namely gold and silver have been brought under the purview of Hallmarking.

A jeweller must get registered with BIS for selling hallmarked jewellery. BIS registered jeweller submits the jewellery for hallmarking to BIS recognized Assaying & Hallmarking (A&H) centre. A&H centres are the testing centres where the jewellery is tested and which operate by IS 15820:2009- General requirements for establishment and operation of Assaying and Hallmarking centres. After testing, the A&H centre applies a hallmark on the jewellery which is found to meet the requirement of the Indian Standard, IS 1417:2016.

Additionally, Consumers can get their jewellery/sample tested from any of the BIS Recognized Assaying & Hallmarking Centres.

Gold Outlook:

Going ahead, gold prices are likely to rise ahead especially MCX gold has a potential target of Rs 76,000 per 10 grams.

In its latest report, MOFSL said, "the gold market has shown resilience in 2024, marked by significant volatility driven by geopolitical tensions, economic uncertainties, and evolving monetary policies. The year began with a strong rally, pushing gold to all-time highs due to heightened safe-haven demand. This surge was fueled by ongoing conflicts, particularly in Ukraine and the Middle East, which have continued to keep investors wary of global stability. Such geopolitical risks have traditionally supported gold prices, and the persistent nature of these tensions suggests that gold's role as a haven will remain crucial in near future. This year, we also have US Presidential elections, uncertainty relating to the same could trigger volatility in bullion."

Motilal added, "Negative influences such as a 9% cut in India's Gold import duty, the unwinding of Yen carry trades, and speculative profit booking have contributed to price pressures. Market dynamics remain complex, with Gold's performance closely tied to fluctuations in the Dollar Index, US Treasury yields, and global monetary policies."

In terms of price projections, Motilal's note said, gold is expected to find support at Rs. 69,500 levels, with potential targets of Rs. 76,000 on domestic front, while on COMEX, $2430 remains an important support, with potential target of $2650.