Jewellers are pinning hope on Diwali for a revival in demand, though they are expecting that the sales may fall by 20-40 per cent over last year's festive business.
Rise in gold prices by 30 per cent in the last 3-4 months, higher import duty and economic slowdown have led to a subdued sentiment among consumers in the season of pre-Diwali sales, they said.
"We are hopeful of a surge in demand for jewellery ahead of Diwali and in the ongoing festive season. We are expecting a sequential growth of 30-40 per cent from the previous months," Senco Gold and Diamonds Executive Director Suvankar Sen told PTI.
Compared to previous year's Dhanteras and Diwali season, the sales are "expected to be lower by 40 per cent this time", a trade body official said on condition of anonymity.
Dhanteras is considered to be an auspicious day for buying gold, silver and other valuables and is largely celebrated in northern and western parts of India.
Jewellers started witnessing a positive sentiment among consumers in the last few days.
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A city store official of Tribhovandas Bhimji Zaveri agreed that sales will likely be lower during this Diwali but there was a "traction in demand in the last 2-3 days" and almost all organised jewellers are "offering discounts to push sales".
This year, Dhanteras will be celebrated on Friday while Diwali is on Sunday.
"An overall wait-and-watch consumer sentiment, underpinned by life time high gold prices in rupee term, has been reported across regions. The recent softness in price has infused a sense of volatility in price movements that has not helped," World Gold Council MD India, Somasundaram PR said.
He said months of July and August saw imports dipping by 60 per cent of last years figures indicating weak trade sentiment.
"Gold continues to be at a significant discount on account of muted demand and an active grey market, impacting organised manufacturers, refiners and jewellers," he said.
Another trade expert Mehul Parekh said this festive season business will "at least be lower by 20 per cent".
According to stock brokers, a trend to go for gold ETFs has also been gaining popularity as it offers quick liquidity and does not involve any making charge.