This Akshaya Tritiya day, jewellers saw robust gold demand as prices were low, thus underlying that the demand trend was strong after last year's weak demand. Also, profit booking from equities led to higher demand.
Sudheesh Nambiath, senior analyst for precious metals, South Asia, GFMS Thomson Reuters said, "Compared to last year's 17 tonnes, our estimate is that this year demand for gold on auspicious day of Akshaya Tritiya on 28th April more than doubled and would be in the range of 35-40 tonnes." In 2015, 31 tonnes gold was sold.
While exact estimate for 2014 is not available, the year has seen among lowest gold demand as it was the year of stringent restrictions on import of gold. In 2013, during Akshaya Tritiya huge imports took place. This year’s demand is considered highest after 2013, according to a bullion analyst.
Jewellers have been sitting on high inventory, which they were forced to reflect on books due to apprehension of higher GST on gold than one% prevailing today. "Hence whatever stock they had, should be brought on books before GST is implemented,” said an industry veteran. The jewellers have to show VAT paid on bills at prevailing rate of 1%.
There are several other reasons for high demand. Last year demand was much lower because jewellery market in general was reeling under several regulatory issues like imposition of excise duty on jewellery, mandatory provision to provide PAN number for purchase above Rs 2 lakh, which jewellers and consumers were not prepared for and amount of unaccounted money was also very high in the system.
Since inventory was also low cost for many jewelers, be it officially imported or otherwise, they offered discounts to lure more customers.
A person associated with gold policy advisory body said part of the profit booked in equity market, which is at all time high , also went to gold buying. Even several customers, willing to buy gold for marriage season, which has still some time to begin, bought jewellery now.
A chartered accountant who facilitated exchange of old currency notes on November-December post demonitisation said, "Money laundered in previous financial year were paid back in gold in new financial year in many cases in form of jewellery."