The annual ritual of buying gold on the auspicious occasion of Akshaya Tritiya, to be celebrated on Tuesday, could drive up...
The annual ritual of buying gold on the auspicious occasion of Akshaya Tritiya, to be celebrated on Tuesday, could drive up sales by as much as 30% over last year’s level, say jewellers.
However, analysts have cautioned against purchases in large volumes, especially for investment purposes, considering negative returns on the precious metal for almost three years now. Global gold prices dropped 28% in 2013 in their worst annual slide since 1981, capping 12 straight years of a bull run.
Gold also declined just over 1% last year and is down marginally so far this year. As the US Federal Reserve is set to hike the interest rate, the analysts are expecting a further drop in gold prices globally, as the precious metal usually shares an inverse relation with the dollar.
Sales of gold jewellery and coins in April have increased by 10-15% over the same month last year and jewellers expect demand to rise further on the day of the festival, aided by a 11% drop in domestic prices from a year earlier.
Gold sales on Akshaya Tritiya, which fell on May 2 last year, were hit by official curbs on the precious metal supplies and consequent high premiums, with many jewellers in Delhi and Mumbai having seen close to a 20% drop in sales.
Kalyan Jewellers executive director Rajesh Kalyanaraman is hoping it will be better this time around as is Balram Garg, managing director of PC Jeweller. Popley Group, which will celebrate its 88th anniversary on Tuesday, hopes to do brisk business as does the Kolkata-headquartered Senco Gold.
“We see a pick-up in advance bookings for jewellery on account of Akshaya Tritiya. Consumer sentiment has definitely improved a lot since last year,” Garg told FE. Rajiv Popley, director at Mumbai-based Poley Group, says the drop in gold prices this year would nudge customers to buy the precious metal.
Already, gold imports are estimated to have hit 125 tonnes in March, compared with just 55 tonnes in February and twice the amount imported a year earlier, suggesting jewellers have stocked up well. After a 14% slide last year to 843 tonnes, demand for gold in India will remain in the range of 900-1,000 tonnes in 2015, according to the World Gold Council.
Hoping that gold would shine more this Akshaya Tritiya, WGC mangaing director Somasundaram PR said: “Notwithstanding unseasonal rains impacting the rural economy this season, gold demand is expected to be strong in 2015 on the back of a resilient economy surging ahead with higher growth.” He added that pro-gold budget announcements to monetise household stocks, coupled with a higher number of auspicious days than last year and a modernising jewellery trade would shape a positive environment for gold in 2015.