By Anil Mathews (ScrapMonster Author)
May 06, 2016 07:50:43 AM
NEW DELHI (Scrap Monster): Despite positive market sentiment, higher gold prices are likely to limit gold sales during Akshaya Tritiya- the auspicious day to buy gold, which falls on May 9th. The gold prices are currently ruling at Rs. 30,050 per 10 grams. The prices have surged higher significantly by nearly 12% over the past two-month period. The gold prices had averaged at Rs. 26,930 per 10 grams during first week of February this year.
Negative sales growth
According to All India Gems and Jewellery Trade Federation (GJF) the gold sale is expected to see marginal rise on Akshaya Tritiya day. Dry weather conditions and extremely high gold prices may impact gold sales during the day. The consumer demand for heavy jewellery items may witness huge drop in demand due to higher gold prices. However, GJF forecasts normal sales for small ticket size items, chains and bangles. It noted that the overall market sentiment continues to remain positive.
Former GJF Chairman Bachhraj Bamalwa noted that consumer demand may decline by almost 10% in terms of sales volume, on account of lower purchase of heavy jewellery. However, a major decline in terms of sales value is not anticipated, mainly due to higher gold prices when compared with the previous year. Consumer preference will be tilted towards small sized jewellery items and coins.
WGC predicts hike in demand
World Gold Council (WGC) MD Somasundaram PR predicts gold sales to witness sharp rise during Akshaya Tritiya. The Indian consumers have been holding back their gold purchases, mainly in anticipation of favorable decision from government to lower import duty on gold. With the government showing no signs of lowering duty on gold, people are likely to go ahead with their purchases. The recent strike by jewellers will also contribute to increased sales during this period, he added. According to WGC, wedding jewellery and coins and bars for investment purpose will see huge surge in demand.
According to jewellers, people may find it more convenient to visit retail outlets, as Akshya Tritiya falls on Monday, following the weekend holidays. The sales are likely to remain robust as this is the first major festival after the jewellers strike. The wedding jewellery booking details suggest that overall gold demand may deliver positive surprises. Expectations of good monsoon are likely to boost the demand further, they hoped.
Gold imports plunge
According to official data, gold imports by the country have declined by almost 10% during the fiscal 2015-’16. The gold imports during the fiscal amounted to 950 tonnes, in comparison with 1,050 tonnes imported during 2014-’15. The drop in imports is mainly on account of the jewellers’ strike. The lack of price parity in global market also affected the imports.
Prices edge higher
Meantime, domestic gold prices inched higher by Rs.25 per 10 grams to Rs. 30,125 per 10 grams on Friday. The support came in from overseas market trends and pick up in buying activity by domestic jewellers ahead of festive and wedding seasons.