Informist, Friday, Apr 21, 2023
By Sandeep Sinha
MUMBAI – Jewellers who had pinned their hopes on Akshay Tritiya for a jump in sale of gold and gold jewellery are in for a disappointment this year as record high prices of the precious metal are likely to keep many buyers away.
Buying gold is considered auspicious on Akshay Tritiya as it is believed to bring wealth and prosperity by Hindus. This year the auspicious day falls on Saturday.
Demand for gold jewellery is seen 40% lower this year on that day as consumers weigh in the high price of the yellow metal. Today, the price of 24-carat gold was 60,446 rupees per 10 gm in the retail market and 22-carat gold 55,369 rupees per 10 gm. On the Multi Commodity Exchange of India, the most-active June contract was at 60,066 rupees per 10 gm.
After gold sales plunged by 50% on Gudi Padwa, jewellers are using various innovative techniques to bring back buyers to stores. They are focusing on light-weight jewellery instead of heavy ornaments and offering discounts on making charges, free coins and silver jewellery and other gifts.
“We estimate retail jewellery sales to fall by 40% on Akshay Tritiya,” Surendra Mehta, national secretary at India Bullion and Jewellers Association. “There is no wedding mahurat on Akshay Tritiya this year due to astrological confluence and gold prices have run up a lot in the last three months, which is creating a doubt in the mind of the consumer whether this level of prices is likely to sustain or not,” Mehta said.
There is a fear that the global economy is heading towards a recession, which forced many buyers to take a conservative approach in terms of jewellery buying, he said.
Echoing Mehta’s view, Chirag Sheth, principal consultant at Metal Focus, said jewellery sales are likely to decline by 20-25% to 15-18 tn on Akshay Tritiya, which is a normalisation of demand as there was pent-up demand last year as people came out of COVID-19 restrictions and splurged on themselves.
“Every year, there is around 30-50 tn of demand for Gold bars/coins/jewellery on Akshaya Tritiya,” said Prithviraj Kothari, chief executive officer and managing director at RiddiSiddhi Bullions Ltd. “As gold prices have run up 10% in the last one month and 20% from last Akshaya Tritiya, people were waiting for prices to stabilise a bit, so physical demand was subdued in the first half of April,” he said.
“Retail jewellery sales are likely to fall 40-45%, but people are buying coins and bars. Cash level transactions are relatively higher due to higher duty,” a jeweller based in Ahmedabad, Gujarat, said on condition of anonymity.
India’s gold imports in the first three months of 2023 have declined 30% on year to 115 tn as high prices have dampened gold coin and jewellery sales. The yellow metal has gained approximately 10% since January due to increased safe-haven demand.
Wedding buying is there, but festival buying on Akshay Tritiya is a little bit conservative. Unless the prices come down to 57,000-58,000 rupees/10 gm – we won’t see jewellery demand picking up, Mehta added.
Kothari is optimistic as gold prices have stabilised above 60,000 rupees in the last 15-20 days, “people have understood that this is the new normal. We are likely to see good demand on Akshaya Tritiya, as it is one of the most auspicious days to buy gold” he said.
“The higher gold prices may create a dent in the discretionary purchase this time. Nevertheless, we expect healthy growth. As economic activities are back on track, we expect a strong investment and consumption-led consumer demand for gold this Akshaya Tritiya and this will definitely enhance the business prospects,” said M.P. Ahammed, chairman, Malabar Group.
Consumers are expected to be more cautious with their purchases in the backdrop of rising gold prices and economic uncertainty, whereas investors will bank on the highly probable opportunity of rising gold prices in the time to come, said Colin Shah, managing director, Kama Jewelry.
Given the strong cultural connect, any short-term softening of prices could mean an Akshaya Tritiya surprise for jewellery demand, Somasundaram P.R., regional chief executive officer, India, World Gold Council.
End
Edited by Vidhi Verma
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