Indian jewelers are banking on what’s considered one of the most auspicious days for gold buying to spur demand in the world’s biggest bullion consumer. Sales on Akshaya Tritiya, viewed by the country’s more than 900 million Hindus as a traditional day to buy precious metals, may increase as much as 20 percent from 2014, Manish Jain, chairman of the All India Gems & Jewellery Trade Federation, said.
“A positive mood exists among the retail sector as Akshaya Tritiya is considered the most auspicious time of the year for purchase of gold,” Jain said. “Gold continues to be a dependable hedge against inflation and is still a valuable purchase” for Indians, he said.
“The jewellery trade is expecting an increase of about 25-30 per cent in sales this year in comparison to sales made last year on Akshya Tritiya,” Confederation of All India Traders (CAIT) said in a release. “It is also expected that Gold Monetisation policy announced by the Finance Minister in the Union Budget may also prompt buyers to purchase gold tomorrow and later monetise it with banks,” CAIT National President B.C. Bhartia said.
Titan Co., the nation’s largest gold jewelry retailer, is among companies offering free gold coins to buyers for purchase of a minimum amount to boost sales, while Joy Alukkas Jewellery is promising to waive off the manufacturing fees on some ornaments.
Consumption of gold in the country, which imports almost all the bullion it needs, will rise to between 900 tons and 1,000 tons this year, the World Gold Council estimates. India’s gold imports surged 93.86 per cent year-on-year to USD 4.98 billion in March 2015 due to declining prices and easing of restrictions by the RBI, as against USD 2.57 billion in the same month in 2014.
“Buying behavior is returning to normalcy following a reduction of the import curbs,” P.R. Somasundaram, managing director of the World Gold Council in India said. “Gold is therefore set to start shining more brightly this Akshaya Tritiya.” “We believe the immediate outlook remains strong and the long term fundamentals of the gold market remain intact. Notwithstanding unseasonal rains impacting the rural economy this season, gold demand is expected to be strong in 2015 on the back of a resilient economy surging ahead with higher growth,” he said.
“Rapid dollar appreciation against other currencies, possible rise in US treasury interest rates and absence of inflation indicate soft gold prices in near term,” says Devendra Nevgi, CEO, ZyFin Advisors. “Given strong US dollar, there is no meaningful upside in gold in next two-three quarters,” says Hitesh Jain, senior commodity analyst, IIFL. “Gold is a must in every portfolio to ensure portfolio stability. Keep at least 5% to 10% in gold,” says Pankaj Mathpal, CEO, Optima Money Managers. “Given the advantages over physical gold, you should be investing in gold through exchange traded funds or gold saving funds,” says Pankaj Mathpal. In the long term gold maintains the fine balance of risk-return for the portfolio. Rajiv Shastri, CEO of Peerless Mutual Fund said.
By Premji
