“People are obviously buying not as much as before,” Khan told AFP as his sales staff weighed gold necklaces and tapped into calculators, adding there had been a “big increase” in prices.
Pakeeza is located in east London’s Green Street jewellery quarter, a popular destination among the Asian community, while nearby shops also sell traditional clothing like abayas and saris.
Gold products, also including rings and other trinkets, are a traditional gift for births, weddings and other family celebrations, because the precious metal is regarded as an inflation-proof investment that will stand the test of time.
Yet the recent spike in gold prices — driven by haven demand amid geopolitical tensions, and the prospect of US interest rate cuts which weighs on the dollar — has impacted the jewellery market.
“When you see rapid jumps in gold and things like that, yes, there’s a shock to the system,” said Vikram Santilal, owner of Jeram Jewellers.
“So the quantity has gone down but budgets have gone up,” he told AFP.
A few years ago, customers could buy 200 grams (seven ounces) of gold for £2,000 ($2,500) — but now they buy only 100 grams and it will cost between £6,000 and £8,000.
“The high prices kind of deterred me from buying, and I have been saving quite a while,” said customer Mariam Lunat, 57, who had just purchased gold bangles that she will give to her daughters as wedding gifts.
“I bought less quantity. Yes, I would have liked to buy… two each, but I’ve only bought one each.”
The gold price has jumped 13 percent since the start of 2024 and in mid-April it set a record of $2,431.52 per ounce, which equates to about 30 grams.
For jewellers, the worst aspect is price volatility because customers track the market and wait for prices to drop before they go shopping.
Khan added that most Green Street jewellers are “working daily” to calculate their own product prices based upon the morning gold-price fix published by industry body the London Bullion Market Association.
This pricing system is essential to the global trade of jewellery, particularly in the world’s two biggest markets: China and India.
“It’s quite normal for an average Asian family to know what the gold price is today… It’s like finding out how much is a litre of petrol,” explained Santilal at Jeram Jewellers.
“Everybody knows that, because if you’ve got a car, you know what a litre goes for. An average Asian family actually knows what the gold price is. So they’ll discuss these things in social circles.”
Total gold demand dropped five percent in the first quarter year-on-year as it became too expensive for some, according to data from the World Gold Council. Demand for jewellery declined two percent.
Green Street stores specialise in 22-carat gold products, giving each product a shiny distinctive golden hue.
This high concentration leaves jewellers exposed to daily fluctuations in the market of the precious commodity, which accounts for 75 percent of the retail price.
That is in marked contrast to classic luxury brands like Boucheron, Cartier and Van Cleef, where prestige has much more of an influence.
