Indian gold jewelry purchases failed to rise Monday even as it was one of the most positive days to buy the yellow metal, because of the rupee getting weak and a recent drop in prices weighed on demand.
Most of the retailers and analysts believed that sales are expected to upsurge by no more than 10%-15% from a year earlier, as prices have improved by 8% since gold dropped to a two-year low in mid-April. Even though a lot of consumers had purchased greatly when prices fell, sales in financial hub Mumbai could rush as shops reopen after a week-long protest against the obligation of a local tax on retail sales.
Gold sales commonly increase by 40%-50% during the Akshaya Trithiya festival, but Indian gold prices were estimated exceeding Rs. 27,000 ($492) per 10 grams on Monday, up from Rs. 25,000 in mid-April. The rupee’s decrease to a one-month low against the USD on Monday did not help any way.
Stated by B Girirajan, president of All Kerala Gold and Silver Merchants Association, “People may make token purchases on this auspicious day,” when buying a piece of gold is believed to bring good luck to new ventures.
Gold demand of exchange traded funds, or paper gold, will expected to increase 65% on Monday to around 10 billion rupees, stated by Sugandha Sachdeva, an analyst at Religare Securities.
Even though a rising number of urban consumers are swapping to the product, which is easier to save than physical gold, paper gold accounts for merely around 1.5% of India’s annual gold demand of about 950 metric tons. Jewelry takes the lion’s share of around 65% of sales.
Sales in the city on Monday possibly will increase by about 30% from a year earlier to 4 tons, as stated by Bombay Bullion Association President Mohit Khamboj.