Gold jewelry sale is expected to rise sharply on the occasion of Akshaya Tritiya this year after an appreciating rupee prompted many to book a piece for delivery on the due date. A stronger rupee has meant the Indian price rise is slower than abroad.
Akshaya Tritiya is on the coming Friday; it is considered one of the most auspicious occasions to buy a precious metal, primarily gold. In earlier years, people bought coins; the trend has shifted to token purchase of light jewelry, with the high prices. This year, bookings are skewed towards gold jewelry, in a price band of Rs 30,000-50,000 a piece.
Buying has been robust this season, with consumers seeing a rising rupee as an opportunity to buy gold. This is one change over recent years — from an occasional purchase, irrespective of price movement, consumers nowadays buy gold at every price dip, even without any occasion.
“It was not a real Akshaya Tritiya last year, due to jewelers’ long strike ahead of this festival. While some of the jewelers and artisans came back to work, buying was not encouraging. We see a completely different trend this year. Akshaya Tritiya and the surrounding week have seen a demand increase. After all the troubles of demonetization, sales seem to have come back. From the initial estimates, there seems a strong revival in demand. We wouldn’t be surprised to see the demand twice as much as last year,” said Somasundaram P R, managing director of the World Gold Council’s arm in this country.
Gold demand was estimated at around 20 tonnes on the occasion last year. Jewelers could not prepare themselves with new and trendy designs, due to the 42-day strike across the industry in protest at a one per cent excise levy.
“We expect double the sales volume this year, as consumers see appreciation in the rupee against the dollar as an opportunity to buy gold. We see smaller-size jewelry much in demand this year,” said Ashok Minawala, director, All India Gems and Jewellery Trade Federation.
Gold prices have risen around 4.5 per cent this calendar year, to a current $1,279 an oz in the international market. The bullion price in India closed on Thursday at Rs 29,275 per 10g at Zaveri Bazaar here. Last year on Akshaya Tritiya, it was Rs 29,855 per 10g or two per cent higher.
“At the current level of elevated political tension in North Korea and Syria, gold would continue its haven appeal. History suggests that prices of precious metals rise in case of inflationary pressure and geopolitical tension. In India, the impact of the gold price rise in global markets has been lower due to appreciation in the rupee against the dollar,” said Prithviraj Kothari, Director, RiddiSiddhi Bullions.
On the worry about whether the five-month rise in gold prices is sustainable and if it makes sense to buy at the onset of a festive and wedding season, gold should be a part of everyone’s portfolio, says Kothari. “It has always given returns to a buyer in a time of uncertainty,” he added.