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Gold likely to lose sheen on high prices this Akshaya Tritiya; jewellers expect 20% dip in demand

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During Akshaya Tritiya, 40% of the business is done in the south, 25% in the west, 20% in the east and the remaining 15% in the north

Mumbai: The recent surge in gold prices, which is hovering around Rs 60,000 per 10 grams, is likely to dampen consumer demand this Akshaya Tritiya, with jewellers expecting a 20% decline in sales in volume terms.

“With gold prices crossing Rs 60,000 per 10 grams recently has made consumers wary of buying the yellow metal. Even though the prices have come down a little bit since then, prices remain bullish. This will affect the sales during Akshaya Tritiya, considered auspicious to buy precious metals. We expect a 20% dip in volume from last year,” All India Gem and Jewellery Domestic Council (GJC) chairman Saiyam Mehra told PTI.

During Akshaya Tritiya, 40% of the business is done in the south, 25% in the west, 20% in the east and the remaining 15% in the north, he said.

Currently, the gold price is ruling at Rs 60,280 per 10 grams level in the domestic market.

Echoing a similar view, former GJC chairman and NAC Jewellers (Chennai) Managing Director Anantha Padmanabhan said that the ruling high gold prices will have an impact on demand this Akshaya Tritiya.

“We are already seeing the impact of the sudden rise in gold prices and we expect a 10% decline in sales in terms of value this Akshaya Tritiya compared to last year. In terms of volume, we are expecting a 20% decrease in demand,” he added.

However, if there is a sudden dip in gold prices it will boost sales, he added.

Commtrendz Risk Management Services CEO Gnanasekar Thiagarajan said the gold prices, which are currently ruling at Rs 60,280 per 10 grams level, though bullish, are likely to remain stable for sometime.

“At present, there are no major triggers to make gold prices volatile, like the US economic data. Even, the current geopolitical situation like the Russia-Ukraine war and oil prices, among others have not affected the gold prices recently,” he said.

It always takes time for consumers in India to get used to the surge in gold prices, therefore, the demand is likely to remain lower during Akshaya Tritiya this year, he added.

World Gold Council Regional CEO, India, Somasundaram PR said that gold purchases are an inseparable part of Akshaya Tritiya celebrations for millions of Indians. It is considered a sign of prosperity, and it signals the start of seasonal buying.

“Though a major gold buying festival, this year Akshaya Tritiya faces life-time high prices of gold and a lukewarm response from consumers over the last few weeks. We could see gold accumulation and small ticket purchases through digital gold buying platforms see faster growth, reinforcing the urgent need for a regulatory framework for these,” he said.

Recent tax changes have put gold funds at a tax disadvantage which could offer an unintended advantage to digital gold buying. However, given the strong cultural connect, any short-term softening of price could mean a Akshaya Tritiya surprise for jewellery demand,” he added.

Kama Jewelry MD Colin Shah said after a dull-performance during the two years of pandemic, the sheen is back to the gold industry.

“Gold prices have witnessed highs in the recent past. Overall during this year, consumers are expected to be more cautious with their purchases due to the backdrop of rising gold prices and economic uncertainty, whereas the investor class will bank on the highly probable opportunity of rising gold prices in the time to come,” he added.

Antara Jewellery MD Ankit Gala said due to an increase in the price of gold, there may be a decrease in the volume of gold purchases this time as compared to the previous year.

“However, we anticipate good sales as many believe that buying gold on this day brings luck and prosperity. Buyers may opt for gold coins, bars, or digital gold rather than jewellery pieces, as they may see gold as a store of value or a hedge against inflation. We can also see a shift in their buying choices for things like diamonds and gemstones, which are considered affordable options for gold,” he added.

However, PNG Jewellers Chairman and Managing Director Saurabh Gadgil said that this year Akshaya Tritiya falls on a Saturday and customers will get an added advantage of it being on a weekend.

“We are bullish about this year’s Akshaya Tritiya. Gold prices are expected to stabilise and stay within the Rs 60,000 mark, which will definitely help boost sales in gold and silver. This year, we expect a 10% hike in business in quantity terms,” he added.

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