A gradual and steep rise in gold prices in the last six months, has put a dampener on the consumers eager to buy gold on Akshaya Tritiya, a Hindu festival considered an auspicious time to buy gold. The festival is being celebrated on May 7 or 8 across the country, often sees surge in gold demand. ?With the price hitting high, gold has substantially lost its appeal amongst masses. It is no more an integral part of consumers? shopping chart,? Manoj Chaudhary, an analyst with Karvy comtrade told FE, adding that demand for gold could not go up in a day.
Gold prices have risen sharply during the last six months. The precious yellow price has moved from around Rs 10,000 per 10 grams in November 2007 to Rs 11,550 per 10 grams on Tuesday.
Analysts say that many big gold jewellery stores had built up huge inventories in anticipation of higher gold prices. ?We saw sales surging during the marriage session in April to about three tonne day. We anticipate that the sales would be less than three tonne a day on the Akshaya Tritiya day,? Prithviraj Kothari, an analyst with Riddi Siddhi Bullions Ltd said.
According to the World Gold Council, despite the price rise, India is the world?s largest consumer of gold. It is expected to import about 900 tonne of gold during 2008.
Despite negative sentiments, jewellery show rooms are gearing up for the day expected surge in gold sales. ?Last year on the Akshaya Tritiya, the gold sales zoomed more than three tonne a day when the prices of the yellow mental was below Rs 10,000 per 10 grams,? a jewellery shop manager from Delhi said.
Analyst pointed out that gold prices are going to soften over the next six months as there is a possibility of US fed rate hike. The domestic gold prices are detected by New York Mercantile Exchange and other global exchanges in the UK and other countries.
At present, import of gold is allowed by banks and other nominated agencies that are permitted by the Reserve Bank of India (RBI). Around 13 banks are active in importing the yellow metal that is then supplied to jewellery exporting units and other big consumers.
Although a revised gold policy is with the government for consideration for last few years, the government and the RBI have a broad agreement that a much large number of participants should be allowed to have a play in import of gold.
There is no reliable estimate available of the total stock of gold available in the country. It varies from 9,000 tonne to 20,000 tonne. The quantum could be much higher as, other than households, there is a significant quantity available with temples, churches and other religious institutions.