Jewellers are expecting a dip in gold demand during Akshaya Tritiya due to rising gold prices. When compared to last year, demand on the Akshaya Tritiya day is expected to be 20-30 per cent lower, jewellers say.
Chirag Sheth, principal consultant at Metal Focus, said the high gold price of around Rs 60,000 per 10 gram is a big barrier for demand and even Akshaya Tritiya, one of the largest festivals for gold purchases, will not be able to ease the situation. "Besides, inflationary pressures is also forcing customers to stay away from non-essential purchases like gold and demand could fall by 20 per cent," Sheth said.
Although no official demand projections for this festival are available, market observers say that the average demand is of 15-20 tonnes. While the demand was very good last year, this year again, it will fall to a medium-term average demand.
Inflationary hurdles are a big problem. They hurt more when customers start expecting the price rise to continue and as a result, cut spending. according to PwC’s latest Global Consumer Insights Pulse Survey for India, "63 per cent of Indian consumers are cutting back non-essential spending altogether." The survey also found that most Indian consumers are expecting to cut expenditure across all surveyed categories over the next six months, a significant decline in planned spend across all categories since the previous Pulse Survey in June 2022. Industries, including luxury and premium products, travel, and fashion, expect to see the greatest portion of consumer spend reductions over the next six months, whereas the groceries segment is expected to decline the least." Gold is on the list of expenses that have already seen a cut.
There are other reasons as well that could result in lower sales this Akshaya Tritiya.
Surendra Mehta, national secretary, Indian Bullion and Jewellers Association said, "This year there are no wedding muhurats & celebrations on Akshay tritiya due to 'Guru Ast'. This is likely to affect jewellery sales on Akshay Tritiya. The rising gold prices are adding fuel to fire as customers are keeping themselves away from jewellery shops. Though Akshay Tritiya itself is a big day for shopping, controversy over muhurat on Akshay Tritiya, coupled with rising prices can bring out sales by at least 25% in comparison to last year."
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This year Tritiya begins on Saturday evening, but several festival-related rituals will be performed on Sunday. Hence, the confusion over muhurat.
Prithviraj Kothari, CEO & MD of Riddisiddhi Bullions, said, "As the US interest rate has risen 500 bps in the last one year, the risk of crises, contraction, and recession has risen. In the midst of all these crises, gold and silver have always outperformed other asset classes and have given double-digit returns historically." Investors who had bought last Akshaya Tritiya have made 18.1 per cent returns, the highest returns in the last three years.
While Kothari sees high prices as a hurdle for gold buying, especially when savings interest rates are around 8 per cent, demand will get affected. However, he said, "Consumers take deliveries of gold booked earlier on Akshaya Tritiya day, and several consumers, who invest in monthly gold schemes, take gold delivery on this day for the schemes matured in near past."
