Jewellery stores in Tiruchi have been seeing fewer customer footfalls in recent days as prices of gold and silver have risen dramatically because of increase in import duty caused by the war in West Asia. The call by Prime Minister Narendra Modi to curb or defer gold purchases has only compounded the volatile situation, industry players said.

“Based on the PM’s suggestion, we have instructed our members to go slow on the sales of gold coins, biscuits, and bars. However, buying and gifting gold ornaments is a part of South Indian culture and will not cease. The import duties for gold and silver have been hiked from 6% to 15% this week, making prices surge. These are difficult times for buyers and sellers of precious metals,” Vijay Raghavan, president, Tiruchi Jewellery Association, told The Hindu.

The association has 350 gold and silver jewellery shops and manufacturing units under its umbrella in Tiruchi.

On Thursday, showrooms on NSB Road were deserted, with only a few customers looking to buy ornaments.

“Customers are getting mixed signals from world politics and local developments. The jewellery sector had already been hit by inflation and the curbs imposed during the State Legislative Assembly elections. Despite these constraints, our Akshaya Tritiya sales in April this year were successful. Perhaps, it will take another week for the situation to settle after the Prime Minister’s suggestion,” said S. Vadivu, general manager, Tanishq.

Ms. Vadivu said “We have seen a steady rise in people coming in with old gold jewellery that can be exchanged for new ornaments as it avoids the need for extra or excessive investment,” she said.

Market observers were of the opinion that crude oil prices and volatility in precious metals trade would stabilise when there is a decisive end to the war in West Asia.

“Only those who have the necessity will opt to buy gold in the forthcoming days. Most families will prefer to allocate their funds for children’s education during June and July rather than jewellery at this point. Tiruchi’s buying capacity is lower compared to industrially developed cities such as Karur and Dindigul where people have more disposable income. The city has lost its standing as the centre for synthetic gems because of lack of technology upgrades and competition from cheaper Chinese imports,” said J. Rajnikanth, a gemmologist and entrepreneur.