Gold sales are likely to remain muted during the Akshaya Tritiya festival on April 18this year, because of rising prices and uncertainty over jewellery hallmarking, which is now mandatory.
Prices of the precious metal are at a 16-month high in local markets, trading at Rs 30,970 for 10 grams on Tuesday. Rising prices are now preventing buyers from making fresh purchases.
Since the last Akshaya Tritiya, on April 28, 2017, gold prices have risen more than 7 per cent from Rs 28,925 per 10 grams.
According to estimates of industry experts, during Akshaya Tritiya this year they will sell less than the 40 tonnes they sold last year.
“Touching last year’s level of gold sales would be a good achievement for the industry this year,” said Ashok Minawala, advisor, All India Gems and Jewellery Domestic Council (GJC).
He was at a press meet to launch Manthan, a two-day seminar starting April 5. Members from 12 industries will participate in it.
Jewellers said there was a surge in bullion demand last year. Gold coins contributed to nearly a third of overall sales.
As prices of the metal slumped around Akshaya Tritiya last year, investors scrambled to make purchases before prices shot up again. With the wedding season round the corner, jewellery demand also jumped on spot booking.
“This year, however, the scene is different. Demand for gold jewellery has been lacklustre,” said Kumar Jain, director, Umedmal Tilokchand Zaveri, a bullion dealer and jewellery retailer in the popular Zaveri Bazaar area in Mumbai.
He added: “Even during the Gudi Padwa festival on March 18 this year, demand was low, primarily because of high prices. The wedding season this year is also shorter than last year’s. We expect demand — for coins and jewellery — to remain weak even during Akshaya Tritiya this year.”
The exchange of old jewellery for new ones, a preferred mode for customers, would continue. Some new demand has also been generated through monthly deposit schemes.
Responding to a recent Reserve Bank of India order to stop unregulated deposit schemes run by jewellers, Minawala said these were advance payments by consumers, with a commitment to buy ornaments.
Jewellers added that their smaller and medium peers were advancing customers’ purchases by up to two weeks from the maturity date of the deposit schemes to boost their festive sales.
They are also uncertain about mandatory hallmarking of gold ornaments and claim it is another major reason for low sales. The government had planned to introduce benchmark purity levels of 14 carats, 18 carats and 22 carats from the beginning of this year, but the date has been postponed.
Jewellers want hallmarking to be voluntary than mandatory.