Gold sales are likely to go up on Akshaya Tritiya this year, inspite of the rise in prices of the precious metal, as there is a lot of pent up demand in the market following the recent 45-day strike, according to jewellers and market analysts.
Akshaya Tritiya is considered an auspicious day for purchasing gold, and falls on Monday this year.
Sales pick up 10-20% every year on Akshaya Tritiya.
This year, it is even more important for the industry, which is recovering from losses due to the countrywide strike by jewellers in protest against the 1% excise duty announced in Budget 2016. The industry is estimated to have incurred losses of over Rs 50,000 crore during the period.
Gold is considered a safe asset and has long been the favoured investment destination for Indian households. This year though, Gudi Padwa, celebrated mostly in Maharashtra, saw lacklustre activity as stores remained closed. With jewellers back in business again, consumers are seen returning to shops for gold coins and jewellery.
“Since jewellery shops were shut, consumers couldn’t purchase gold. The mood is positive now and we expect sales to rise 10% this year,” said Sreedhar GV, chairman, India Gems and Jewellery Trade Federation.
“The entire retail jewellery industry looks forward to this day every year, but this year it’s extra special due to the strike,” said Saurabh Gadgil, CMD, PNG Jewellers.
Gold prices rallied in the last few months and hit Rs 31,000 per 10 gram earlier this week, tracking a rally in the global market, where prices crossed $1,300 an ounce to hit a 15-month high. Prices have risen amid continued global growth worries, which prompted the US Federal Reserve to leave interest rates unchanged last month, and a weak US dollar.
According to analysts, there could be some correction in gold prices in the near-term due to the recent rally, but it could hit fresh highs by December, given the weakness in other asset classes, including real estate and stocks, and global economic uncertainties.
“Globally interest rates are close to zero. Japan and Europe are infusing liquidity, and the fear of US Fed raising rates quickly, too, have receded. This is a perfect recipe for gold to rally,” said Kishore Narne, commodities head at brokerage Motilal Oswal.