Mumbai: With the gold prices soaring to a 15-month high amidst the weakness in US dollar, domestic jewellers are expecting a subdued demand for yellow metal during Akshaya Trithiya, considered auspicious to purchase gold.
Retail jewellers said that the consumer enthusiasm has remained largely lukewarm despite the jewellers ending their 40-day long strike as high prices are acting as a major deterrent.
“The gold was trading at around Rs 26,500 per 10 grams before the jewellers went on a nationwide strike. However, now gold prices are hovering around Rs 30,195 per 10 grams, which is discouraging consumers from splurging their money on gold. There could be a 20 per cent drop in sales during this Akshaya Trithiya as compared to the previous year,” said Bachhraj Bamalwa, director and past president of All India Gems and Jewellery Trade Federation.
According to industry estimates, roughly about 50 tonnes of gold jewellery were transacted during last Akshaya Trithiya when the yellow metal was trading at around Rs 27,000 per ten grams. “Consumers could make token purchases, but they would go for the big ticket purchases only when the prices drift lower,” he added.
As people had burnt their fingers by buying gold at Rs 30,000 levels earlier, experts believe that they might wait for the price to come down. The precious metal had climbed above $1,300 per ounce in the global market on Monday for the first time since January 2015. Gold is now the best performing asset class in 2016 with over 20 per cent return till date. It regained its lost appeal as a safe haven asset amidst a sharp plunge in commodity prices, which renewed concerns about the global growth slowdown.
Moreover, the US Federal Reserve’s decision to hold interest rate steady during its recent meeting also led to a weakness in dollar and a rally in gold. “Gold is keeping its momentum higher around $1,300 mark as a survey pointed towards a weaker than expected manufacturing growth in China in April. The China Caixin manufacturing Purchasing Managers Index (PMI) fell to 49.4 from 49.7 in March. Overnight, gold moved above $1,300 an ounce for the first time in 15 months in spite of light volume as the dollar fell to a fresh nine-month lows amid soft US manufacturing data,” said IFA Global in its post market commentary.
Aditya Pethe, director at Waman Hari Pethe Jewellers, said the appreciation in rupee against the dollar had actually capped a major upside in domestic gold prices.
