Gold prices in India soared to record highs, dampening demand prospects in the world's second-largest gold consumer.
For India's majority Hindus, Buddha's Full Moon Festival is one of the most auspicious days of the year to buy gold.
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Chirag Sheth, chief consultant at Metals Focus Ltd., said there was a "significant increase in buying" over the weekend compared with the past few months. But Sheth said that while sales were likely to be higher than a year earlier, volumes were likely to be down. This year's Buddha Full Moon Festival falls on April 22 and lasts until the next morning.
Global gold prices have soared this year as banking turmoil stoked safe-haven demand, pushing Indian gold futures to record highs in April. The country accounts for more than a fifth of global demand for jewelry, bars and coins, and imports almost all of it, mainly from Switzerland and the United Arab Emirates.
Unless domestic prices drop by 5-10%, demand will be weak between April and June, with overall volume growth expected to be flat or even negative this year compared to 2022, Sheth said. "Sales in the January-March quarter were already weak and the current quarter has also been dragged down by high prices," he said. Gold consumption last year stood at 774 mt, according to the World Gold Council.
A heat wave in India also affected demand. Ashish Pethe, a jeweler and former chairman of the All India Gems and Jewelery Domestic Council, said that while April and May will be peak sales due to the extended wedding season, the extreme heat is a concern "because people usually don't venture out of their homes and just Visit the store at night." India is heading for a hotter summer than usual this year.
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