CHAPTER I

INTRODUCTION
 INTRODUCTION

Gold (symbol-Au, atomic number-79), is a chemical element having a bright yellow colour in
its purest form. It is one of the least reactive chemical elements and is solid under standard
conditions.

Of all the precious metals, gold is the most popular as an investment. Investors generally buy
gold as a way of diversifying risk, especially through the use of futures contracts and
derivatives. The gold market is subject to speculation and volatility as are other markets.
Compared to other precious metals used for investment, gold has been the most effective and
safe across a number of countries.

Across the globe, gold is considered as the only true storehouse of value and wealth. As
financial circumstances of families improve, they invest more in gold. Such investments are
usually in the form of jewellery, coins, ornaments, bullion, etc.

Gold Consumption

China is the largest producer and consumer of gold in the world. India is the next largest
consumer, even though majority of it is imported.

In India gold demand is mainly driven by cultural beliefs - buying gold jewellery is
considered auspicious, particularly during festivals and weddings.

Gold in the form of jewellery is also used to tide over financial emergencies and can thus act
as a financial support system.

Maximum demand for gold comes from jewellery, accounting for around 55% of the overall
demand for gold (based on FY 2014 figures). (Source: Gold Demand Trends – FY 2014 |
World Gold Council).
STATEMENT OF PROBLEM

This project is an attempt to study the gold market in India and to understand the factors
which contribute to the price hike of gold jewellery. It also aims to analyse the trend of rising
gold prices in the current scenario.

SIGNIFICANCE OF STUDY

Gold has been an integral part of Indian households for a long time. The impact of price hike
in international economy has been reflected in the domestic economy as well. Due to its
social and cultural significance, the demand for gold has sustained, even with the sharp
increase in its price.

OBJECTIVE OF STUDY

● To study the current demand for gold jewellery in India

● To study the cause of price hike of gold in India
● To understand the impact of the rising gold prices from a consumer's perspective

RESEARCH METHODOLOGY
1. Primary data has been collected using questionnaire method. A set of 55 respondents
were selected by convenient sampling and provided with the questionnaire.

2. Secondary data has been collected from various magazines, journals, published books,
newspapers and internet.

TOOLS OF ANALYSIS

Tables have been used for analysis of data collected. Tools used for representation are pie
charts and graphs.

LIMITATIONS OF STUDY

● The data was collected from a small number of people in a limited area.
● The survey is subject to the bias and prejudices of the respondents. Hence, 100%
accuracy cannot be assured.
● It is not possible to analyse and interpret all aspects of the topic.

SCHEME OF STUDY

The whole study is divided into five chapters:

CHAPTER I
Chapter I is introduction to the research.

CHAPTER II
Chapter II is review of literature.

CHAPTER III
Chapter III includes the theoretical framework.

CHAPTER IV
Chapter IV contains data analysis and interpretation.

CHAPTER V
Chapter V includes findings, suggestions and conclusion to the topic.
ARTICLES RELATED TO THE TOPIC OF RESEARCH
 CHAPTER II

REVIEW OF LITERATURE
 REVIEW OF LITERATURE

1. S P Narang, Raman Preet Singh(2012) attempts to find out the unidirectional or

bidirectional relationship between Sensex and gold prices for a time period from 2002
to 2012. Monthly data was collected from RBI, Bombay bullion association and bse-
india.com for the research. The results reveal that in the long run there's no impact of
Sensex on gold prices and similarly hike in gold prices does not lead to rise in Sensex.

2. Pratap Singh (2013) in his study, aims to analyse the trend in gold price,it's demand,
volatility and the reason for increasing price in India. He also made a comparison
between India and China on the basis of gold consumption. The study concluded that
average annual growth for the year was 12.27% and that gold was an effective form of
investment. Jewellery demand has been affected by the high inflation rate,b which led
to a reduction in consumer confidence.

3. Anli Suresh (2013) conducted a study based on the investment portfolio by Indian
investors in gold . Research methodology was descriptive and analytical based on
secondary data gathered from various international publications. Study concluded that
gold has become an integral part of Indian society, the foundation of savings as well
as wealth in India. This study also concluded that rather than the traditional concept of
an ornament, Indian investors have started to view gold as an investment avenue with
many virtues (evident from the demand in relation to price).

4. Kriti Arekar, Swati Godbole (2014) conducted a study with the aim of evaluating
the factors which impact buying behaviour of gold in retail consumer also to find
which factor among risk and return, market information, motives, security opinions
and benefits have a greater impact in various age groups. Regression analysis was
conducted and it was concluded that motives, market information as well as risk and
return were the major impacting factors.

5. Prerana Baber, Ruturaj Baber, George Thomas (2013) conducted an analytical

study to determine the factors contributing towards the ever increasing price of gold
in India and the impact of factors like buying behaviour, inflation, commodity market
etc. gas affected the same. Empirical test results reveal a positive correlation between
gold price and other factors. The study emphasized that there is a need to concentrate
on the issue whether gold is a prolific asset in India.
6. Nishtha Sadana (2017) conducted a resource to understand the reasons which cause
the price of gold to vary with the help of trend analysis. The analysis was based on the
time period from 1985 to 2015 which game a clear picture of domestic gold prices.
Regression model was constructed and the results supported the hypothesis.

7. S Vanitha, K Saravanakumar(2019) in their study about investment in gold found

that appreciation or depreciation of gold is based on other investments like
international crude oil price, fixed deposits, provident fund, mutual fund etc.
According to this study factors affecting gold prices include inflation, global
movements, festive seasons, stock market and so on. There is also a strong relation
between price of gold, silver and crude oil.

8. R Kannan, Sarat Dhal (2008) in their study provided an analytical and empirical
view regarding India's physical gold demand during the period 1980-2005. The
demand function was specified in terms of real income, latest gold price and variables
such as interest rate, equity price, personal income tax, exchange rate etc. which is
connected to the monetary, financial and fiscal policies. On the basis of the empirical
study, policy perspectives where derived in the context of economic development
goals.
 CHAPTER III

THEORETICAL FRAMEWORK
 THEORETICAL FRAMEWORK

Gold (symbol-Au, atomic number-79), is a chemical element having a bright yellow colour in
its purest form. It is one of the least reactive chemical elements and is solid under standard
conditions.

Gold as a metal

Gold is a highly malleable and ductile element which makes it useful as wires in
semiconductors. It also is resistant to corrosion and thus can be stored for long period of time.
As gold is non-oxidising, it also maintains a uniform weight.

Gold is a relatively rare element which incurs a high cost of extraction and purification thus
leading to its high price. Moreover, it's popularity among the people leading to its never
ending demand, contributes to this price hike.

Gold as an investment

Among all precious metals, gold is considered to be the most popular avenue for investment
purposes. Investors generally invest in gold to diversify their portfolio especially in the form
of futures and derivatives.

The traditional way of investing in gold is buying gold bullion. I'm many countries like
Canada and Austria they can be sold and bought at major banks or can be transacted through
bullion dealers who provide the same service. Bullion can be of two types- bars and coins.
Bars generally have a lower premium than the bullion coins.

Gold exchange traded products include exchange traded funds(ETFs), exchange traded notes
(ETNs) and close ended funds(CEFs) which are traded like shares in major stock exchanges.
They represent an easy way to invest in gold without physically storing the bullion. However,
the risk associated with such investments is higher than the inherent risk of the metal itself.
Gold as a reserve
Gold reserves are funds of gold bullion held by government or bank, which is distinct from
private hoard of gold held by an individual or a non-financial entity. Historically such
reserves were accumulated by rulers and governments primarily to meet the cost of wars
while banks accumulated such reserves so as to fulfill their promise to pay depositors in gold.
Over the years, major portion of gold reserves shifted to Central banks. As commercial banks
started to use currency notes issued by central banks, they became dependent on the latter for
gold to meet depositors demand.

Gold jewellery
Prized for its lustre and beauty, gold is the classic setting for most of the jewellery. The
standard measurement of gold is in karat. Pure gold is 24 karats, meaning 24 out of 24 parts
are gold. However, pure gold being highly malleable, it is usually combined with other metal
alloys to increase its strength. Even though yellow gold is still the most popular colour, there
are alloy combinations which give rise to other colours like white gold, rose gold and even
blue and green colours.

In India, gold jewellery has traditional, aesthetic and emotional value associated with it. The
amount of jewellery owned by a woman denotes her stature in the society and considered to
be a matter of prestige. In addition to this, most people consider gold to be a worthy
investment of their savings, which has led to India becoming one of the largest consumers of
gold in the world, just behind China.

Role of gold in the economy

Every government tries to acquire gold in all possible ways. However, the reasons might be
different. It has proved to be an asset for the governments and civilians for decades and ages.
Nevertheless, the meaning of gold changed over the years, and all governments which were a
part of central banks or treasury now own a significant amount of gold reserves in the form of
segregated investment of foreign currencies, foreign governmental bonds, and precious
metals.

It is not important how much of gold is purchased and held by a government in the form of
the reserve but how much of that gold held represents its total reserves. Based on how much
gold reserve they are carrying, policymakers frame the economic and political outlook of the
nation. This is the significance of gold.

● Gold Reserves is used to hedge against inflation – The governments buy large
amounts of gold when the country starts to experience high levels of inflation. As the
supply of gold is limited during inflationary times, the demand for gold increases.
Due to the characteristics of gold, it is able to maintain its high value better than other
forms of currency. Whenever investors feel that the value of the currency might
decline even they start buying loads of gold against that currency.

● Gold Reserve determines imports and exports – Any currency is strongly

connected to the value of its imports and exports from the country. When imports
exceed exports, the value of the currency will decline, and likewise, the currency will
appreciate when net exports are higher. Thus, a country that exports gold and has an
excess of gold reserves will see an increase in the strength of its currency and gold
prices rise. As a result, the value of total exports becomes higher.

● Gold Reserve determines the value of its own currency – There is a direct
relationship between gold and local currency. If there is high demand from the
manufacturing sector for gold needed for production, then it will cause the gold price
to rise. The currency on the other will be slightly higher or around the same price. But
one needs to analyse the conditions and look at other factors also appropriately.

● Gold reduces the value of that currency used to buy it – When central banks make
many transactions in gold, it affects the demand and supply of the local currency and
may cause inflation. This is because banks need to print more cash in to be able to buy
gold, thereby creating an excess supply of fiat currency (i.e, currency established by
government as money but does not have intrinsic value).

Indian scenario

India's gold market is driven primarily by the consumption and fabrication of the yellow
metal. Both have a significant impact in terms of economic value add, employment,
contribution to foreign exchange earnings, and the trade balance. A report commissioned by
the World Gold Council from PricewaterhouseCoopers estimated that gold made a direct
contribution of more than $30 billion to the Indian economy.
The role and the impact of gold are reflected by the gems and jewellery industry which
contributes around 7% of the country's gross domestic product (GDP) and 15.71% to India's
total merchandise exports. The gems and jewellery sector in India is one of the largest in the
world and contributes to about 29% of the global consumption.

1. Impact on the current account deficit - Although oil imports are primarily
responsible for the high current account deficit (CAD) in the country, India's huge
gold imports is also partially responsible for it since the second largest part of the
import bill is gold. CAD occurs when a country's total imports and transfers are
higher than its total exports.

2. Growth of the gold loan industry - Pledging gold as collateral has been an ever-
present feature of India's gold market. There are two types of gold loan providers -
formal (banks and non-banking finance companies) and informal (money lenders and
pawnbrokers).

Advantages and disadvantages of investing money in gold

Advantages:
● Hedge against inflation - Gold has a direct relation with inflation. Gold historically
performs well during inflation while investors anticipate stocks and bonds to
underperform.

● Liquidity - Gold is considered to be a highly liquid asset as it can be converted into

cash as and when the investor wants.

● Diversification - Gold is considered to be an excellent avenue for diversification of

an investor's portfolios. Diversification helps to reduce the risk in investment.

● Holds value over long period of time - gold has an inherent value which will not
change drastically even if price falls. This is because it is a commodity; whereas
Indian rupee (which is a fiat currency), has no intrinsic value.
 ● Desired commodity - Gold has been the most popular commodity in India among
both men and women for a long time. It is not subject to any political chaos and is the
most desirable gem for jewellery making.

Disadvantages:
● Not a passive investment- Gold is not a passive investment, unlike stocks and bonds.
It doesn't provide a regular income as dividend or interest. The only income earned is
by selling it in the open market.

● Difficult to store - If investment in gold is in the form of jewellery, coins, bars, etc.
the investor needs to find a safe and secure place for storage. If the person avails a
bank locker facility, then maintenance charges have to be paid.

● Loss due to price correction- At a time when value of gold is rising and stock price
is crashing, people may invest more in gold even at high price. When this price
corrects after sometime, it may lead to a loss for the investor.

Risks involved in investing money in gold

● Gold price is not a reliable investment marker -Gold prices have a zero to negative
correlation when compared to equities and bonds. However, when the economy
booms and the value for equities and bonds go up, gold prices may take a hit. In
simple terms, gold prices are inversely proportional to mutual funds, bonds,
government securities, and equity markets.

● Purity Problems - If gold items are bought from non-reputed or local jewellers, the
purity could be a problem. The hallmark testing is a solution to this, but it checks for
just a fraction of the gold in items, making it difficult.

● Making and storing charges - The storing charges for secure storage of gold may
lead to a hefty amount being taken away from the investment money.

● Risk of robbery - gold when stored in physical form is susceptible to theft which is
not only a risk to the investment money but also to the life of investor.
 ● Low resale value - when gold is resold around 5 to 10% of the market price in
addition to the making charges paid. Also, if price of gold at the time of selling is less
than the price at which it was bought, it leads to losses.

● No tax benefits - unlike mutual funds and stocks, investment in gold does not offer
much tax benefits to the investor.

● Sentimental asset - In India gold has both traditional and sentimental value
associated with it. So a person may not be ready to part with the asset even if the
situation is favourable for selling.

● Nominal returns - The price of gold varies gradually over e period of time. It does
not change as drastically as the price of other securities. Thus, the returns expected is
less.

Gold price
Over the past several decades, the price of gold has been influenced by many different
factors. Gold’s price history has seen some significant ups and downs, and dramatic changes
in price may be fuelled by such issues as central bank buying, inflation, geopolitics, monetary
policy equity markets and more.

One of the biggest drivers of gold is currency values. Because gold is denominated in dollars,
it can have a significant impact on the price of gold. A weaker dollar makes gold relatively
less expensive for foreign buyers, and thus may lift prices. On the other hand, a stronger
dollar makes gold relatively more expensive for foreign buyers, thus possibly depressing
prices. Paper currencies have a tendency to lose value over time.

The price of gold is constantly moving, as the metal is traded all over the globe. When it is
night time in the U.S., for example, gold prices could be on the move during active trading in
Asian markets.

Although past performance is not necessarily indicative of future results, gold’s price history
can potentially provide clues as to where it could be headed. Looking at past price data, for
example, may help with spotting uptrends or downtrends. Gold price charts depict all of
gold’s activity, and can assist investors in buying or selling decisions.
Fig (i): 10 years gold price in Chinese yuan/ounce

Fig (ii): 10 years gold price in Indian rupee/ounce

Fig (iii): 10 years gold price in US Dollars/ounce

 CHAPTER IV

DATA ANALYSIS AND

INTERPRETATION
 TABLE 4.1

AGE GROUP OF RESPONDENTS

RESPONSE NO. OF RESPONDENTS PERCENTAGE

11-20 years 0 0
21-30 years 41 75
31-40 years 3 5
41-50 years 8 15
51-60 years 3 5
Total 55 100
(Source: Primary Data)

CHART 4.1.1

AGE
0%
5%
15% 11-20 years
21-30 years
5%
31-40 years
41-50 years

75% 51-60 years

INTERPRETATION: 75% respondents were 21-30 years old, 31-40 years old and 51-60
years old formed 5% of total respondents each, while 15% of respondents were 41-50 years
old.
 TABLE 4.2

GENDER OF RESPONDENTS

RESPONSE NO. OF RESPONDENTS PERCENTAGE

Female 44 80
Male 10 18
Prefers not to say 1 2
Total 55 100
(Source: Primary Data)

CHART 4.2.1

GENDER
2%

18%

Female
Male
Prefers not to say

80%

INTERPRETATION: 80% of respondents were females, 18% were males, while 2%

preferred not to reveal their gender.
 TABLE 4.3

EDUCATIONAL QUALIFICATION (completed)

RESPONSE NO. OF RESPONDENTS PERCENTAGE

10TH standard 0 0
10 + 2 2 4
Graduation 29 53
Post Graduation 24 43
Total 55 100
(Source: Primary Data)

CHART 4.3.1

EDUCATIONAL QUALIFICATION
(completed)

53
No. of respondents

43

0 4 PERCENTAGE

10TH standard 10 + 2 Graduation Post

Graduation
Response

INTERPRETATION: 53% of respondents are graduates, 43% were post-graduates and 4% of

respondets have completed 10+2 schooling.
 TABLE 4.4

OCCUPATION OF RESPONDENTS

OCCUPATION NO. OF RESPONDENTS PERCENTAGE

Business 4 7
Government sector 6 11
Private sector 14 26
Professional 6 11
Others 25 45
Total 55 100
(Source: Primary Data)

CHART 4.4.1

OCCUPATION
45
No. of responedts

26

11 11
7

PERCENTAGE

Response

INTERPRETATION: 26% of respondents worked in private sector, government sector

employees and professionals made up 11% of total respondents each, 7% of responndents
were involved in business and 45% were occupied with other jobs.
 TABLE 4.5

LOCATION OF RESPONDENTS

LOCATION OF NO. OF RESPONDENTS PERCENTAGE

RESPONDENTS
Urban 39 71
Rural 16 29
Total 55 100
(Source: Primary Data)

CHART 4.5.1

LOCATION

29%

Urban
Rural

71%

INTERPRETATION: 71% of respondents were from urban areas while 29% were residing in
rural areas.
 TABLE 4.6

ANNUAL INCOME OF RESPONDENTS

ANNUAL INCOME OF NO.OF RESPONDENTS PERCENTAGE

RESPONDENTS
Upto 250,000 22 40
250,000 – 500,000 18 33
500,000 – 750,000 8 14
750,000 – 10,00,000 6 11
Above 10,00,000 1 2
Total 55 100
(Source: Primary Data)

CHART 4.6.1

ANNUAL INCOME
40
33
No. of respomdents

14
11 PERCENTAGE
2

Upto 250,000 – 500,000 – 750,000 – Above

250,000 500,000 750,000 10,00,000 10,00,000
Response

INTERPRETATION: Annual income of 40% of respondents were below Rs.2.5 lakhs,while

33% of respondents had annual income between Rs.2.5 lakhs and 5lakhs. Respondents with
annual income from Rs.5 lakhs to 7.5 lakhs formed 14% of total respondents and 11% had
income between Rs.7.5 lakhs and 10 lakhs. 2% respondents had income above Rs.10 lakhs.
 TABLE 4.7

ANNUAL SAVINGS OF RESPONDENTS

ANNUAL SAVINGS OF NO. OF RESPONDENTS PERCENTAGE

RESPONDENTS
Upto 25,000 24 44
25,000 – 50,000 17 31
50,000 – 75,000 4 7
75,000 – 100,000 5 9
Above 100,000 5 9
Total 55 100
(Source: Primary Data)

CHART 4.7.1

ANNUAL SAVINGS
44
No. of respondents

31

9 9 PERCENTAGE
7

Upto 25,000 – 50,000 – 75,000 – Above

25,000 50,000 75,000 100,000 100,000
Response

INTERPRETATION: Annual savings of 44% respondents were below Rs.25000, 31% had
savings between Rs.25000 and 50000 while 7% had savings between Rs50000 and 75.
Persons with savings of Rs.75000- 1lakh and above 1 lakh formed 9% each of total no. of
respondents.
 TABLE 4.8

FAMILY SIZE OF RESPONDENTS

FAMILY SIZE OF NO.OF RESPONDENTS PERCENTAGE

RESPONDENTS
1-2 members 6 11
3-4 members 31 56
5-6 members 16 29
7-8 members 1 2
Above 8 members 1 2
Total 55 100
(Source: Primary Data)

CHART 4.8.1

FAMILY SIZE
2% 2%

11%
Upto 2 members
29% 3-4 members
5-6 members
7-8 members
Above 8 members
56%

INTERPRETATION: 56% of respondents belonged to families having 3-4 members, 29%

belonged to families with 5-6 members, while 11% came from families having 1-2 members.
Respondents belonging to families having 7-8 members and more than 8 members made up
2% each of total no. of respondents.
 TABLE 4.9

MARITAL STATUS OF RESPONDENTS

MARITAL STATUS OF NO.OF RESPONDENTS PERCENTAGE

RESPONDENTS
Unmarried 38 69
Married 14 25
Others 3 6
Total 55 100
(Source: Primary Data)

CHART 4.9.1

MARITAL STATUS
69
No. of respondents

25 PERCENTAGE

Unmarried Married Others

Response

INTERPRETATION: 69% of respondents were not married, 25% were married while 6%
belonged to other categories (like divorced, widowed, etc.)
 TABLE 4.10

FREQUENCY OF PURCHASE OF GOLD JEWELLERY

FREQUENCY OF NO.OF RESPONDENTS PERCENTAGE

PURCHASE
Once in a month 1 2
Once in 3 months 0 0
Once in 6 months 4 7
Once in a year 13 24
Once in 2 years 4 7
Rarely 33 60
Never 0 0
Total 55 100
(Source: Primary Data)

CHART 4.10.1

FREQUENCY OF PURCHASE OF GOLD

JEWELLERY
0% 2% 0%
Once in a month
7%
Once in 3 months
Once in 6 months
24%
Once in a year
60% Once in 2 years
7% Rarely
Never

INTERPRETATION: 60% of respondents rarely purchase gold jewellery, while 25% make
purchases once in a year. 7% of respondents purchase gold jewellery once in every 2 years
while another 7% purchases once in every 6 months. Gold jewellery is bought once in a
month by 2% of respondents.
 TABLE 4.11

PURPOSE OF PURCHASING GOLD JEWELLERY

PURPOSE OF PURCHASE NO. OF RESPONDENTS PERCENTAGE

For own use 23 42
Wedding 11 20
Investment 9 16
Gifts 11 20
Festivals 1 2
Status symbol 0 0
Total 55 100
(Source: Primary Data)

CHART 4.11.1

PURPOSE OF PURCHASE OF GOLD

JEWELLERY
42
no. of respondents

20 20
16
2 0
PERCENTAGE

response

INTERPRETATION: 42% of respondents purchase gold jewellery for own use, 20% buy
gold for weddings and 16% buy gold jewellery as an investment. Another 20% of
respondents purchase gold jewellery as gifts, while 2% purchase it during festivals and other
auspicious occasions.
 TABLE 4.12

PREFERENCE OF GOLD MARKET

PREFERENCE OF NO. OF RESPONDENTS PERCENTAGE

MARKET
From Indian market 33 60
Imported from foreign 4 7
markets
No preference 18 33
Total 55 100
(Source: Primary Data)

CHART 4.12.1

PREFERENCE OF MARKET TO
PURCHASE GOLD JEWELLERY
60
No. of respondents

33

7 PERCENTAGE

From Indian market Imported from No preference

foreign markets
Response

INTERPRETATION: 60% of respondents prefer to buy gold from Indian markets while 7%
prefer gold imported from foreign markets. 33% of respondents do not have a preference
regarding markets for buying gold jewellery.
 TABLE 4.13

MOST IMPORTANT REASON FOR PURCHASE OF GOLD JEWELLERY

REASON FOR PUCHASE NO. OF RESPONDENTS PERCENTAGE

OF GOLD JEWELLERY
Price discounts 31 56
Compliments 7 13
Gifts 8 15
Others 9 16
Total 55 100
(Source: Primary Data)

CHART 4.13.1

MOST IMPORTANT REASON FOR

PURCHASE OF GOLD JEWELLERY

16%
Price discounts
Compliments
15%
56% Gifts
Others
13%

INTERPRETATION: 56% of respondents answered that price discount is the most influential
factor for purchasing gold jewellery while 15% stated that gifts are considered most
important factor. 13% considered compliments to be the influential factor which attracts them
to buy gold jewellery while 16% people cited other reasons.
 4.14 :REASONS FOR BUYING GOLD

TABLE 4.14(a)

PURCHASE OF GOLD JEWELLERY IS FOR PERSONAL PLEASURE

RESPONSE NO. OF RESPONDENTS PERCENTAGE

Strongly agree 10 18
Agree 21 38
Neutral 19 35
Disagree 1 2
Strongly disagree 4 7
Total 55 100
(Source: Primary Data)

CHART 4.14(a).1

PURCHASE OF GOLD JEWELLERY FOR

PERSONAL PLEASURE

38
35
no. of respondents

18 PERCENTAGE

7
2

Strongly agree Agree Neutral Disagree Strongly disagree

response

INTERPRETATION: 18% of respondents strongly agreed to the statement that purchase of

gold jewellery is for personal pleasure, 38% agreed to this, while 35% neither agreed nor
disagreed.2% disagreed with this statement while 7% strongly disagreed with the same.
 TABLE 4.14(b)

PURCHASE OF GOLD JEWELLERY IS CONSIDERED AS A STATUS SYMBOL

RESPONSE NO. OF RESPONDENTS PERCENTAGE

Strongly agree 5 9
Agree 15 27
Neutral 13 24
Disagree 13 24
Strongly disagree 9 16
Total 55 100
(Source: Primary Data)

CHART 4.14(b).1

PURCHASE OF GOLD JEWELLERY

CONSIDERED AS A STATUS SYMBOL

9% Strongly agree
16%
Agree
27% Neutral
24%
Disagree

24% Strongly disagree

INTERPRETATION: 9% of respondents strongly agreed with the statement that purchase of

gold jewellery is considered as a status symbol, 27% agreed with it while 24% respondents
neither agreed nor disagreed. Another 24% of respondents were disagreeing with the
statement while 16% strongly disagreed.
 TABLE 4.14(c)

COMMON PRACTICE IN INDIAN HOUSEHOLDS TO UTILISE SAVINGS TO BUY

GOLD JEWELLERY

RESPONSE NO. OF RESPONDENTS PERCENTAGE

Strongly agree 20 36
Agree 22 40
Neutral 7 13
Disagree 5 9
Strongly disagree 1 2
Total 55 100
(Source: Primary Data)

CHART 4.14(c).1

COMMON PRACTICE IN INDIAN

HOUSEHOLDS TO UTILISE SAVINGS TO
BUY GOLD JEWELLERY
2%

9% Strongly agree

13% 36% Agree

Neutral
Disagree
40%
Strongly disagree

INTERPRETATION: 36% of respondents strongly agreed to the statement that it is a

common practise in Indian households to utilise savings for buying gold jewellery, while
40% agreed with it. 13% of total respondents neither agreed nor disagreed with the statement,
9% disagreed, while 2% strongly disagreed with the same.
 TABLE 4.14(d)

GOLD CAN BE PLEDGED TO RAISE FUNDS AT ANY TIME

RESPONSE NO. OF RESPONDENTS PERCENTAGE

Strongly agree 30 54
Agree 24 44
Neutral 1 2
Disagree 0 0
Strongly disagree 0 0
Total 55 100
(Source: Primary Data)

CHART 4.14(d).1

GOLD CAN BE PLEDGED TO RAISE

FUNDS AT ANY TIME
54
no. of respondents

44

PERCENTAGE
2 0 0

Strongly Agree Neutral Disagree Strongly

agree disagree
response

INTERPRETATION: 54% of respondents strongly agreed to the statement that gold can be
pledged to raise funds at any time, 44% agreed to it, while 2% neither agreed to it nor
disagreed.
 TABLE 4.14(e)

GOLD CAN BE EASILY CONVERTED TO CASH ANYWHERE IN THE WORLD

RESPONSE NO. OF RESPONDENTS PERCENTAGE

Strongly agree 30 54
Agree 24 44
Neutral 1 2
Disagree 0 0
Strongly disagree 0 0
Total 55 100
(Source: Primary Data)

CHART 4.14(e).1

GOLD CAN BE EASILY CONVERTED TO

CASH ANYWHERE IN THE WORLD
2% 0% 0%

Strongly agree
Agree
44% Neutral
54%
Disagree
Strongly disagree

INTERPRETATION: 54% of respondents strongly agreed to the statement that gold can be
easily converted to cash, 44% agreed and 2% neither agreed nor disagreed to the same.
 TABLE 4.14(f)

ADVERTISEMENTS AND OFFERS GIVEN BY RETAILERS ATTRACT CONSUMERS

TO BUY GOLD JEWELLERY

RESPONSE NO. OF RESPONDENTS PERCENTAGE

Strongly agree 11 20
Agree 23 42
Neutral 16 29
Disagree 4 7
Strongly disagree 1 2
Total 55 100
(Source: Primary Data)

CHART 4.14(f).1

ADS AND OFFERS GIVEN BY

RETAILERS ATTRACT CONSUMERS
42
no. of respondents

29
20

7 PERCENTAGE
2

Strongly Agree Neutral Disagree Strongly

agree disagree
response

INTERPRETATION: 20% of respondents strongly agreed to the statement that

advertisements and offers given by retail shops attracts more consumers to buy gold, 42%
agreed to it whole 29% neither agreed nor disagreed. 7% of respondents disagreed with it
whereas 2% of respondents strongly disagreed.
 TABLE 4.14(g)

GOLD JEWELLERY IS AN ASSET OF LAST RESORT IN EMERGENCY SITUATIONS

RESPONSE NO. OF RESPONDENTS PERCENTAGE

Strongly agree 29 53
Agree 21 38
Neutral 4 7
Disagree 1 2
Strongly disagree 0 0
Total 55 100
(Source: Primary Data)

CHART 4.14(g).1

GOLD JEWELLERY IS AN ASSET OF

LAST RESORT IN EMERGENCY
SITUATIONS
2% 0%

7%
Strongly agree
Agree
Neutral
38% 53%
Disagree
Strongly disagree

INTERPRETATION: 53% of respondents strongly agreed to the statement that gold

jewellery is considered as an asset of last resort in emergency situations, 38% agreed to it
whereas, 7% neither agreed nor disagreed with it. 2% of respondents disagreed with this
statement.
 TABLE 4.15

IS GOLD JEWELLERY CONSIDERED AS A SAFE, LONG TERM INVESTMENT?

RESPONSE NO.OF RESPONDENTS PERCENTAGE

Yes 34 62
No 3 5
Maybe 18 33
Total 55 100
(Source: Primary Data)

CHART 4.15.1

GOLD JEWELLERY IS CONSIDERED AS

A SAFE, LONG-TERM INVESTMENT

33%
Yes
No
62% Maybe

5%

INTERPRETATION: 62% of respondents agreed that gold jewellery is considered to be a

safe, long- term investment avenue, 5% disagreed, while 33% were not sure about their
answer.
 TABLE 4.16

WILL YOU PURCHASE GOLD JEWELLERY EVEN WHEN PRICE INCREASES?

RESPONSE NO.OF RESPONDENTS PERCENTAGE

Yes 9 16
No 18 33
Maybe 28 51
Total 55 100
(Source: Primary Data)

CHART 4.16.1

PURCHASE OF GOLD JEWELLERY

EVEN IF PRICE INCREASES

16%

Yes
No
51%
33% Maybe

INTERPRETATION: 16% of respondents are stated that they will purchase gold even if
price hike of gold in the market, 33% were not willing to do the same, while a majority of
respondents were not sure about their answer.
 TABLE 4.17

IF YES, REASON FOR PURCHASE

REASON FOR PURCHASE NO. OF RESPONDENTS PERCENTAGE

Marriage 24 43
Special occasions 7 13
Gift 6 11
Expecting further increase in 5 9
price
No response 13 24
Total 55 100
(Source: Primary Data)

CHART 4.17.1

REASON FOR PURCHASING GOLD

JEWELLERY
Marriage

24% Special occasions

43%
Gift
9%

11% Expecting further increase

in price
13%
No response

INTERPRETATION: 43% respondents answered that they are willing to purchase gold
jewellery even if price increases for the occasion of marriage, 13% are willing to do the same
in case of other special occasions, 11% are willing to buy gold as gift even if price hikes,
while 9% of respondents were in favour of purchasing gold as they anticipate a further
increase in price. 24% of respondents are not willing to buy gold jewellery for any reason
when there is a price hike of gold jewellery.
 TABLE 4.18

WILL YOU EXCHANGE OLD JEWELLERY FOR NEW , EVEN IF PRICE

INCREASES?

WILLINGNESS TO NO. OF RESPONDENTS PERCENTAGE

EXCHANGE
Yes 7 13
Sometimes 17 31
Rarely 13 23
No 18 33
Total 55 100
(Source: Primary Data)

CHART 4.18.1

EXCHANGE OF OLD JEWELLERY EVEN

IF PRICE INCREASES
33
31
NO. OF RESPONDENTS

23

13
PERCENTAGE

Yes Sometimes Rarely No

RESPONSE

INTERPRETATION: 13% of respondents stated that they exchange old jewellery for new
even if price increases, 31% stated that they sometimes exchange old jewellery despite the
price hike while 23% rarely do the same. 33% of respondents do not exchange old jewellery
when price increases.
 TABLE 4.19

UPDATE OF INFORMATION REGARDING PRICE OF GOLD

FREQUENCY OF UPDATE NO.OF RESPONDENTS PERCENTAGE

Daily 7 13
Weekly 8 15
Monthly 9 16
Just before purchase 29 53
Never 2 3
Total 55 100
(Source: Primary Data)

CHART 4.19.1

UPDATE OF INFORMATION
REGARDING GOLD PRICE
60 53
NO.OF RESPONDENTS

50
40
30
20 13 15 16
10 3 PERCENTAGE
0
Daily Weekly Monthly Just Never
before
purchase
RESPONSE

INTERPRETATION: 13% of respondents update their knowledge regarding price of gold on

a daily basis, 15% update it weekly, 16% update it monthly, while 53% update it just before
making a purchase. 3% of respondents do not update information about price of gold.
 TABLE 4.20

AWARENESS REGARDING OTHER FORMS OF GOLD

FORMS OF GOLD NO. OF RESPONDENTS PERCENTAGE

Gold coin schemes 17 31
Gold savings schemes 14 26
Gold ETFs 5 9
Sovereign gold bonds 3 5
Digital gold 6 11
Gold mutual funds 7 13
None of these 3 5
Total 55 100
(Source: Primary Data)

CHART 4.20.1

AWARENESS REGARDING OTHER

FORMS OF GOLD
31
26
no. of respondents

11 13
9
5 5

PERCENTAGE

response

INTERPRETATION: 31% of respondents are aware of gold coin schemes, 26% know about
gold savings schemes, 9% are aware of gold ETFs, while 5% are aware of sovereign gold
bonds. 11% of total respondents are aware of digital gold, 13% have heard of gold mutual
funds, whereas 5% of respondents are not aware of any of the above options.
 TABLE 4.21

INVESTMENT IN OTHER FORMS OF GOLD

FORMS OF GOLD NO. OF RESPONDENTS PERCENTAGE

Gold coin schemes 8 15
Gold savings schemes 10 18
Gold ETFs 0 0
Sovereign gold bonds 0 0
Digital gold 3 5
Gold mutual funds 4 7
None of these 30 55
Total 55 100
(Source: Primary Data)

CHART 4.21.1

INVESTMENT IN OTHER FORMS OF

GOLD

Gold coin schemes

15%
Gold savings schemes
Gold ETFs
18% Sovereign gold bonds
55%
0% Digital gold
0% Gold mutual funds
7%
5% None of these

INTERPRETATION: 15% of respondents have invested in gold coin schemes, 18% have
invested in gold savings schemes and 5% have invested in digital gold. 7% of respondents
have made an investment in gold mutual funds while a majority of the respondents have not
invested in any of the above forms of gold.
 TABLE 4.22

RISK INVOLVED WHILE INVESTING IN GOLD JEWELLERY

RISK INVOLVED NO. OF RESPONDENTS PERCENTAGE

Instability of price 18 33
Loss on resale 16 29
Finding safe and secure 12 22
storage space
Impurity of jewellery 9 16
Total 55 100
(Source: Primary Data)

CHART 4.22.1

RISK INVOLVED IN INVESTING IN

GOLD JEWELLERY
33
29
no. of respondents

22
16

PERCENTAGE

Instability of Loss on resale Finding safe Impurity of

price and secure jewellery
storage space
response

INTERPRETATION: 33% of respondents believe that instability of price is a major risk

factor involved while investing in gold jewellery, while 29% consider loss on resale of
jewellery as a major risk factor. 22% of respondents consider the difficulty of finding a safe
and secure storage space for gold jewellery as a major risk factor whereas, 16% cited
impurity of gold jewellery as a risk factor.
 TABLE 4.23

WILL YOU CONTINUE PURCHASING GOLD JEWELLERY EVEN IF PRICE

INCREASES?

WILLINGNESS TO NO. OF RESPONDENTS PERCENTAGE

PURCHASE
Yes 19 35
No 4 7
Maybe 32 58
Total 55 100
(Source: Primary Data)

CHART 4.23.1

WILLINGNESS TO PURCHASE GOLD IN

FUTURE EVEN IF PRICE INCREASES

35% Yes
No
58% Maybe
7%

INTERPRETATION: 35% of respondents will continue to purchase gold in future even if

price of gold increases, while 7% are not willing to do the same. 58% of the total respondents
are not sure of their response.
 CHAPTER V
FINDINGS, SUGGESTIONS
AND CONCLUSION
 FINDINGS OF THE STUDY

The important findings as a result of this study regarding various aspects have been stated in
the relevant chapters. The findings are:

1. The result of the study indicates that majority of respondents (75%) belong to the age
group of 21-30 years, followed by 41-50 years (15%).

2. The result of the study shows that vast majority of the respondents (80%) are females
whereas, males accounted for 2% of respondents.

3. 53% of respondents are graduates, closely followed by post graduates at 43%, as per
the study.

4. As per the results of the study, 26% of respondents work in private sector, 11% in
government sector while majority respondents (45%) belong to ‘others’ category,
comprising of students, teachers, homemakers, etc.

5. Majority of respondents (71%) lives in urban areas, while 29% of respondents reside
in rural areas.

6. According to the study, 40% of respondents have annual income below Rs.2.5 lakhs,
while 33% has annual income between Rs.2.5 lakhs and 5 lakhs.

7. The results of the study indicate that the annual savings of 44% of respondents are
below Rs.25000 while 31% of respondents have saved Rs.25000-501`000.

8. Majority of respondents (56%) belong to families having 3-4 members, based on the
results of the study.

9. As per the study results, 69% of respondents are not married, while 25% are married.

10. The results of the study show that 60% of respondents rarely purchase gold jewellery,
whereas 24% make purchases once in a year.

11. 42% of respondents answered that they purchase gold jewellery for own use, while
20% each purchase it for weddings and as gifts respectively.

12. A major sector of respondents (60%), prefer to buy gold jewellery from Indian
markets while 33% do not have a preference of market.
13. Most important reason which attracts respondents to purchase gold is price discounts
(56%) followed by factors other than the options given (16%).

14. 38% of respondents agree that purchase of gold jewellery is for personal pleasure
while 35% neither agree nor disagree, based on the study results.

15. 54% of respondents strongly agree to the statement that gold can be pledged at any
time to raise funds while another 44% agree to the same.

16. In similar manner to the previous response, 54% respondents strongly agree to the
statement that gold is highly liquid asset ie, it can be easily converted to cash
anywhere in the world.

17. 42% of respondents agree to the statement that advertisement and offers given by
retailers attract more people to purchase gold jewellery, whereas 29% of respondents
are not sure about their response.

18. According to the data collected, more than half of the total respondents strongly agree
that gold is commonly considered to be an asset of last resort. An additional 38% of
respondents agree to the same.

19. A large sector of respondents (62%), agree to the statement that gold is considered to
be a safe, long-term investment avenue.

20. On the basis of the results obtained from the study, 51% of respondents may consider
buying gold jewellery even if price increases while 33% are not willing to do the
same. Only 16% respondents are willing to buy gold jewellery despite an increase in
price.

21. Of the people who are either willing or may consider buying gold jewellery despite of
price hike, 43% cite marriage as the major reason.

22. 33% of respondents are not willing to exchange their old jewellery for new if there is
a price hike, according to the results of the study.
23. 53% of respondents stated that they update information regarding the price of gold
just before making a purchase, while 16% do monthly updates.

24. Based on the results of the study, more than half of the respondents are aware of
either gold coin schemes (31%), or gold savings schemes (26%), with regards to
alternate forms of gold investments.

25. However, majority of respondents (55%) have not invested in any other forms of
gold. Only 15% have invested in gold coin schemes, while 18% have invested in gold
savings schemes.

26. According to the results of the study, 33% of respondents are of the opinion that
instability of price is the major risk involved while investing in gold jewellery while
another 29% considers difficulty in finding safe and secure storage space to be an
important risk.

27. Regarding future situations, 58% of respondents are not sure whether they will
purchase gold if price hikes, while 35% are willing to do the same.
 SUGGESTIONS

1. Based on the results of the study, most respondents do not update information
regarding gold price regularly. Frequent update of information is crucial in case of
any type of investment, especially for an asset like gold where price variations occur
frequently.

2. Constant update also helps to decide the best time for investing or disinvesting based
on price.

3. Even though a significant number of people are aware of alternative forms for gold,
most respondents are still making investment in gold jewellery alone. Investing in
other forms like digital gold, gold mutual funds, etc. may help in reducing the risk of
storing physical gold.

4. Awareness regarding the advantages of investing in alternate forms of gold need to be

spread wider.

5. Gold being an integral metal in the Indian society, people blindly make investments
even if there is high fluctuations in price. This may lead to loss in future. Hence,
people need to make informed decisions based on risk-return ratio rather than simply
favouring purchase of gold based on cultural or emotional reasons alone.

6. Moreover, honest and accurate information regarding gold and its investment need to
be published with focus on price variations. The articles published should help people
to compare the pros and cons of investing in gold with that of other instruments.

7. As many people are attracted by price discounts when purchasing gold jewellery,
retailers should try to offer the same as frequently as possible and especially on
occasions of cultural or emotional value.

8. In addition, as most people are attracted by advertisements and offers provided by

retailers, the latter should focus on making good strategies to improve the same.
 CONCLUSION
`

The study has given a better understanding of the mindset of consumers while investing in
gold jewellery and how the variations in price affect the purchasing decisions. It also helped
to understand the current standing of gold jewellery as an investment avenue as against other
forms of investment.

The research has proved that although gold has been considered to be a precious commodity
for centuries (both in terms of its worth and as a cultural symbol), it still continues to be
perceived as a worthwhile investment by most investors. It continues to be a highly liquid
asset which helps people to raise fund whenever required

A significant factor which affects the purchase of gold jewellery is the irregular variations in
price. Investors are reluctant to invest in gold when prices keep on increasing. However many
people are also ready to invest despite the price hike, anticipating further hike in price.

Hence, the research has shown that gold is regarded as a secure, long term investment option
by a large number of people, leading to a high demand despite the price hike. People consider
investment ion gold to be a safer option when compared to many other investment options.

It can be concluded based on the results of the study that even though consumers of gold are
influenced by price discounts and other offers, the price hike of gold does not affect the
demand for gold to the same extend it would in case of other commodities, mainly due to its
high liquidity.