By Rajendra Jadhav
MUMBAI (Reuters) – Gold demand remained lower than normal on Wednesday during an Indian festival when buying gold is considered auspicious as the rally in prices to a record high prompted retail consumers to reduce purchases.
Indians were celebrating Akshaya Tritiya, the second-biggest gold-buying festival after Dhanteras.
“Footfalls in jewellery stores improved from evening but still in volume terms demand was around 15% lower than normal,” Surendra Mehta, secretary at the India Bullion and Jewellers Association (IBJA).
Big retail chains, which were offering discounts on jewellery making charges, were doing comparatively better business than single-store retailers, as near-record high prices stretched consumers’ budgets, Mehta said.
Domestic gold prices hit a record high of 99,358 rupees per 10 grams this month and were around 95,000 rupees on Wednesday, nearly 30% higher since the last Akshaya Tritiya festival.
Despite record-high gold prices, positive consumer sentiment persists, with many exchanging old jewellery for new to manage budgets for festivals and weddings, said Saurabh Gadgil, chairman of PNG Jewellers.
Indian dealers on Wednesday offered a discount up to $20 an ounce over official domestic prices, inclusive of 6% import and 3% sales levies.
Gold demand during Akshaya Tritiya was likely lower in volume but could be the same or slightly higher in value, said Sachin Jain, CEO of the World Gold Council’s Indian operations.
Big and small retailers were offering discounts on jewellery making charges to lure retail buyers. However, many still preferred to buy coins and bars for investment purposes, said a Hyderabad-based jeweller.
“Demand was lower than usual, but still better than what the industry expected. Even with record-high prices, retail buying didn’t take a big hit,” said IBJA’s Mehta.
(Reporting by Rajendra Jadhav, editing by Ed Osmond)
