Indian Brides Replace Traditional Gold Jewelry as Prices Rise

Oct. 22 (Bloomberg) -- Ashima Lahiri will say her wedding vows in December wearing fake earrings, necklaces and bangles that cost a tenth of the price of gold, breaking a millennia-old Indian tradition that brides wear the precious metal.

``Gold is too hot now,'' says the 25-year-old fashion designer from Kolkata, eastern India, who'll spend 15,000 rupees ($305) on her bridal set instead of 160,000 rupees for a real one. ``You can't touch it.''

Lahiri's not alone. Indian families, the world's biggest buyers of gold, are canceling purchases before the peak wedding season because prices have touched a record high in India, putting traditional bridal sets out of reach. That's spurred sales of gold-plated, silver and brass gem-encrusted jewelry, designed to match the bride's wedding saris.
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Bullion, considered an investment haven, has weathered a global rout in commodities that has sent the Reuters/Jefferies CRB Index down 18 percent this month, the biggest fall in at least 52 years. In India, gold has gained 14 percent this year, reversing a 6 percent decline in the global spot rate, because a 20 percent slump in the Indian rupee against the dollar to a record low has driven up the cost of importing the metal.
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Households in India have 15,000 tons locked away in family vaults, almost double the reserves held by the U.S. Federal Reserve, according to consultant McKinsey & Co. That's worth about $376 billion at current prices after gold has gained for seven straight years.

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``Every home in India has enough gold so if there is a wedding all they have to do is melt old jewelry and make new sets,'' said Daman Prakash Rathod, director at MNC Bullion Ltd., the biggest bullion dealer in southern India.